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Provision of non-audit services and individuals’ investment decisions: Experimental evidence

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  • Ackert, Lucy F.
  • Church, Bryan K.
  • Schneider, Arnold

Abstract

We conduct an experiment to investigate whether concerns about an auditor’s independence and reputation affect individuals’ investment decisions. We examine whether the disclosure of audit and non-audit fees affects participants’ investment decisions. We find that investment in clients of a less reputable auditor is reduced relative to that in other companies when non-audit fees exceed audit fees. Participants’ investment in companies audited by a reputable auditor, however, is not affected by fee disclosures.

Suggested Citation

  • Ackert, Lucy F. & Church, Bryan K. & Schneider, Arnold, 2008. "Provision of non-audit services and individuals’ investment decisions: Experimental evidence," Research in Accounting Regulation, Elsevier, vol. 20(C), pages 177-185.
    • Handle: RePEc:eee:reacre:v:20:y:2008:i:c:p:177-185
    DOI: 10.1016/S1052-0457(07)00209-3
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    1. Li, Chan & Raman, K.K. & Sun, Lili & Wu, Da, 2017. "The effect of ambiguity in an auditing standard on auditor independence: Evidence from nonaudit fees and SOX 404 opinions," Journal of Contemporary Accounting and Economics, Elsevier, vol. 13(1), pages 37-51.

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