IDEAS home Printed from https://ideas.repec.org/a/bla/ausact/v29y2019i3p485-501.html
   My bibliography  Save this article

Non‐audit Services and Auditor Independence Depending on Client Performance

Author

Listed:
  • Sun Min Kang
  • In Tae Hwang
  • Kang Sung Hur

Abstract

We posit that the effect of non‐audit fees on auditor independence in Korea is based on audit client performance. Further, we suggest that an audit client with low performance has an incentive to purchase non‐audit services (NAS) from an incumbent auditor to facilitate earnings management and steer accounting practices in a preferred direction. We find evidence that as non‐audit fees in Korea increase, auditor independence is reduced only for low‐performing audit clients. Thus, unconditional prohibition of NAS seems unnecessary. Regulators and policymakers should examine the motivation for purchasing NAS, particularly among audit clients with poor performance.

Suggested Citation

  • Sun Min Kang & In Tae Hwang & Kang Sung Hur, 2019. "Non‐audit Services and Auditor Independence Depending on Client Performance," Australian Accounting Review, CPA Australia, vol. 29(3), pages 485-501, September.
    • Handle: RePEc:bla:ausact:v:29:y:2019:i:3:p:485-501
    DOI: 10.1111/auar.12243
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/auar.12243
    Download Restriction: no
    File URL: https://libkey.io/10.1111/auar.12243?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Reshma Kumari Tiwari & Jasojit Debnath, 2021. "Joint Provision of Non-audit Services to Audit Clients: Empirical Evidences from India," Vikalpa: The Journal for Decision Makers, , vol. 46(3), pages 153-165, September.
    2. Nofan Hamed Al-Olimat & Mohannad Obeid Al Shbail, 2021. "The Mediating Effect of External Audit Quality on the Relationship Between Corporate Governance and Creative Accounting," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(1), pages 149-157, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ausact:v:29:y:2019:i:3:p:485-501. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1035-6908 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.