Types of nonaudit service fees and earnings response coefficients in the postsarbanes oxley era

Chen, Anthony and Duong, Hong and Ngo, Anh,(UNSPECIFIED), Types of nonaudit service fees and earnings response coefficients in the postsarbanes oxley era. , Advances in Accounting, UNSPECIFIED

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In this study, we partition the joint provision of nonaudit services (NAS) into audit-related, tax, and all other services, and examine whether these services have varying impacts on independence-in-appearance, as measured by earnings response coefficients, over an extended period following the enactment of SOX. Prior research examining independence-in-appearance generally focuses on the years surrounding SOX and uses an aggregate NAS measure despite anecdotal and experimental evidence that there may be heterogeneity in how investors perceive different types of NAS. We first show, consistent with prior research, that an aggregate measure of NAS does not, on average, significantly influence earnings response coefficients. We then partition NAS fees by type and provide evidence that investors have negative perceptions of audit-related NAS and positive perceptions of tax NAS, and that these two effects cancel out one another in aggregate. Further investigation reveals that our results are driven by firms with high levels of accruals and smaller firms, which further corroborates our findings. We also find that measures of financial dependence fail to fully capture the channels through which NAS influences investor perceptions. Lastly, we provide evidence that perceptions of tax NAS are, in part, driven by their effect on a firm's tax strategies.
Keywords : Nonaudit fees Audit-related Tax NAS Earnings response coefficients Earnings quality Auditor independence Data availability: All data is publicly available from the sources cited in the text., UNSPECIFIED
Journal or Publication Title: Advances in Accounting
Volume: 44
Item Type: Article
Subjects: Akuntansi
Depositing User: Users 8 not found.
Date Deposited: 23 Dec 2019 08:34
Last Modified: 23 Dec 2019 08:34
URI: https://repofeb.undip.ac.id/id/eprint/745

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