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This study seeks to examine whether there are differences between companies that purchase either recurring or non‐recurring audit services and those that do not, and whether auditors discount their audit fees for either type of non‐audit service.

The study examines associations between audit and non‐audit fees in New Zealand, for the period 1995 to 2001. The advantage of this setting is that data on non‐audit services was disclosed in this period and that the period pre‐dates more recent controversies over whether non‐audit services are permissible.

Companies that purchase any type of non‐audit services from their auditors are larger and more complex than companies that purchase auditing only. Companies that obtain tax services from their auditors usually do so on a recurring basis. In contrast, consulting services do not tend to occur every year. Auditors do not discount their fees for either recurring or non‐recurring non‐audit services.

While useful data is available about the type of non‐audit services provided, there are limitations to the extent to which this information provides a precise measure of whether the services were recurring or not.

The research contributes to understanding the issues regarding auditors providing non‐audit services by providing evidence that neither recurring nor non‐recurring services are associated with a reduction in audit fees. This finding is relevant when considering whether regulation of non‐audit services should permit certain types of services, or should prohibit all non‐audit services.

The purpose of this paper is to examine the efficacy of the current legislative provisions that protect auditor independence in Australia. The collapses of several high-profile companies (Enron and WorldCom in the USA, HIH insurance and OneTel in Australia) in the early 2000s has raised questions about audit quality and independence. In response, regulators have introduced new regulations and guidance to improve audit quality. In Australia, the Corporations Act 2001 (2001) was amended via the Corporate Law Economic Reform Program Act 2004. This study poses the question: do non-audit service fees influence the level of accounting conservatism?

The sample used in this analysis consists of all available Australian listed companies from the years 2006 till 2010.

Using multiple measures of accounting conservatism and the auditor-client economic bond, our results suggest that the level of the economic bond between the auditor and the client does not significantly influence the level of accounting conservatism.

Our results demonstrate that the combination of intrinsic market mechanisms and regulation in Australia sufficiently protect auditor independence.

The purpose of this study is to examine the association between non-audit service fees provided by the auditor and auditor independence in stable and unstable economic conditions. Further, this study investigates whether client importance impairs auditor independence in two different Australian economic environments.

This study focuses on financially distressed firms listed on the Australian Stock Exchange from 2005 to 2014. The data is obtained from SIRCA and the Morning Star databases. The probit method is used as a baseline regression model, the two-stage least squares and the sensitivity of control variable tests are used to control for any endogeneity and self-selection bias concerns.

This study shows that in stable economic conditions, non-audit service fees provided by auditors impair auditor independence. This suggests that economic bonding between auditor and client serves as a threat to the auditor’s independence, perhaps because of the importance given to the larger clients. In contrast, the authors find no association between non-audit service fees and auditor independence in unstable (highly regulated) economic conditions largely because of higher litigation risk. The results of this study are robust to alternative model specifications and endogeneity concerns.

This study provides an important implication to regulators that macro-economic conditions influence the strength of incentives related to non-audit services for auditors. Furthermore, this study enhances the understanding of regulators (Australian Security Investment Commission) and the strategies adopted by Australian auditors in response to economic incentives and market-based incentives.

The authors contribute to the existing literature by providing evidence that there is a tradeoff between market-based incentives (i.e. lower litigation costs) and economic incentives (i.e. non-audit services fees) with economic uncertainty influencing the importance of these incentives to auditors.

The purchase of non-audit services from incumbent auditors has generated considerable attention. This study aims to examine the relationship between characteristics of non-audit services, namely, the recurrence and types of services, and accruals quality in Malaysia.

This study analyzed hand-collected audit and non-audit fees of 1,117 observations from Malaysian firms from 2009 to 2011. This study used descriptive analysis, univariate tests and multivariate regression to investigate the potential effect of non-audit services on accruals quality.

Non-audit services are associated with lower accruals quality. Recurring and non-recurring non-audit service fees are detrimental to the quality of accruals, as are all types of recurring non-audit services. Only non-recurring audit-related services decrease accruals quality. The results demonstrate that provisions of non-audit services create economic bonding, and thus a threat to auditor independence. Results remain robust with the inclusion of corporate governance and institutional variables.

The sample period might represent a limitation as it only covers three years of data. This limitation is mainly because of the nature of data collection of the non-audit services fees.

The findings could suggest a refinement on the Malaysian Institute of Accountants (MIA) by-laws focusing on auditor independence, and it could assist other regulative bodies such as the Securities Commission, the stock exchange (Bursa Malaysia) in ensuring better governance on the provision of non-audit services.

This study is the first that provides evidence on the relationship between non-audit services, types, and recurring and non-recurring non-audit services and accruals quality in Malaysia.

The paper aims to investigate audit and non-audit fees during the global financial crisis (GFC) in an environment that is relatively sparsely regulated with regard to the provision of non-audit services.

Audit and non-audit fees were studied during pre-GFC (2006-2007), GFC (2008-2009) and post-GFC (2010-2011) periods.

During the GFC, Swedish companies benefited from an increase in sales and total assets, although return on assets decreased. In this setting, the auditors charged higher audit fees compared with the pre-GFC period, despite the absence of increased audit reporting lags. A significant increase in audit fees continued during the post-crisis periods with auditors paying more attention to companies’ leverage and whether they report losses. At the same time, the companies spent less on non-audit services.

This study is limited to companies from Sweden, which was less affected by the GFC.

GFC auditors are able to charge higher audit fees to public companies including those that are well-performing during financial crises, and they are also able to increase the audit fees in the post-crisis period. This implies that auditors put in extra audit effort to compensate for higher risk, or that they are good at negotiating prices with their clients. However, non-audit fees decreased during the same period, implying that the demand for these services drops under financial instability.

The study highlights auditors’ behavior in the liberal economic environment and it studies both audit fees and non-audit fees before GFC, during GFC and after the GFC. The GFC appears to have provided audit firms the opportunity to extract higher audit fees. Our findings are of interest to managers, auditors and regulators.

To examine whether or not new auditors of former Andersen clients perceive prohibited non‐audit services from Andersen as a business risk indicator and, therefore, adjust for the effects of this important risk factor in their audit pricing.

Utilizing a significant number of involuntary auditor switches in the US as a result of the collapse of Andersen in late 2002, this study uses regression analyses to examine the hypothesized associations between two types of non‐audit services and successor auditors' audit pricing.

This study finds that the provision of financial information systems (FIS) design and implementation services and internal audit outsourcing services are positively associated with audit fees charged by successor auditors. This study supports the recent prohibition on the provision of FIS and internal audit services mandated by the Sarbanes‐Oxley Act of 2002.

This study adds to the recent body of work on the association between the provision of certain non‐audit services and the predecessor auditor independence or audit quality perceived by the successor auditor and provides valuable information for policy makers.

While a few US studies on the impact of the provision of non‐audit services on auditor judgment have found potential harm to independence, it is the purpose of this study to investigate whether the British and Australian auditors' involvement with both audit and non‐audit services for the same clients may also produce similar results.

The parametric t‐tests and the nonparametric Mann‐Whitney tests are used in this study on the empirical data from the British and Australian companies to examine the potential for loss of independence when high levels of non‐audit services are provided to audit clients.

The results corroborated the US Securities and Exchange Commission's contention that the provision of non‐audit services may indeed impair independence.

No attempts were made to isolate the effects of other factors that could result in the issuance of qualified opinions. In addition, the sample used in this investigation is comprised of firms that had voluntarily disclosed non‐audit fees in the early years of the study. This could potentially introduce a self‐selection bias. Nevertheless, this study is one of a kind in the international arena.

This paper extends the line of research examining the impact of non‐audit services on the auditor's independence.

The purpose of this paper is to examine whether political connections further impair auditor independence by investigating the relationship between non-audit fees and audit fees and as to whether political connections moderate such relationship.

This study employs panel regression analysis. The panel data set consists of 379 firm-year observations for three years from year 2001 to 2003.

Based on 379 firm-year observations for the period of 2001-2003, grounded on two proxies of political connections namely politically connected firms and the proportion of Bumiputras directors, the authors find a positive and significant relationship between non-audit fees and audit fees, and the relationship becomes weaker, only for Bumiputra-dominated firms connected firms.

This study contributes to the extant literature by examining the role of political connections in the context of auditor independence. In addition, this study is conducted in Malaysia, which provides a unique institutional environment with the existence of political connections that is built on ethnic grounds.

The purpose of this paper is to explore whether the provision of non-audit services (NAS) by public accounting firms undermines audit quality. The study addresses this question by testing for an association between the provision of consulting services and auditor independence in listed companies.

The authors study if the magnitude of non-audit fees explains variations in earnings management by looking at the joint determination of non-audit fees, audit fees, and abnormal accruals using the SURE-regression estimation method.

Evidence from tested models suggests that audit services quality is uncompromised by the provision of NAS. In other words, high non-audit fees do not necessarily result in poor quality financial reporting.

A different research methodology and a different sample (e.g. non-listed companies) may lead to differing results. As the paper analyses only one country, generalizability of the results might be a limitation. There is no need to increase legal restrictions on the provision of consulting services by public accounting firms in order to better safeguard audit quality.

Consulting clients may be more confident to hire both audit and NAS with the same firm and can make a case before the general Shareholders’ meeting. By providing both audit and NAS, consulting firms obtain knowledge spillovers and synergies while appealing highly qualified professionals.

The use of simultaneous equations (SURE-regression) to establish the auditor-client relation allows us to better model theoretical relations between audit fees, non-audit fees, and abnormal accruals. Likewise, joint modeling takes account of correlations between the error terms of the individual models, yielding more efficient estimates than ordinary least squares. Performing this analysis in a non-Anglo-American country with low litigation risk is also a valuable contribution to extant literature.

This paper aims to provide preliminary evidence on the determinants of non‐audit service provision and whether the provision of such services impairs auditors' independence in the context of Bangladesh.

Both univariate and multivariate regression methodologies are used to test the hypotheses. Signaling theory is used to test whether auditors from a non‐litigious environment are concerned about signaling their quality to the market by constraining clients' earnings management behavior.

Results show that larger firms, firms with more liquidity, firms having an audit firm with an international link as their auditor and multinational subsidiaries purchase more non‐audit services, while highly‐leveraged firms purchase less. With respect to non‐audit fees (NAF) causing auditors to sacrifice their independence, this study fails to find any relationship between NAF and discretionary accruals (DACCR) after controlling for factors that are expected to drive DACCR behavior.

Use of DACCR as an earnings management device has been criticized on the ground that managers could use DACCR to signal their own private information. Hence, future research should look at alternative proxies of earnings management to investigate the relationship between non‐audit services and earnings management.

The findings of this paper will be of use to financial reporting regulatory authorities in Bangladesh, such as the Securities and Exchange Commission of Bangladesh as well as the Institute of Chartered Accountants of Bangladesh, regarding the corporate governance role played by the auditors.

Use of DACCR to detect earnings management behavior in the context of Bangladesh is a novel idea. The findings that the purchase of non‐audit services does not lead to increased earnings management behavior in a developing country context further strengthens the notion that there is a spill‐over effect of providing non‐audit services.