Revisiting the regulation of auditor independence: Spanish evidence on different perceptions

Following the dramatic financial scandals at the turn of the millennium, the financial system reporting framework has changed considerably to restore confidence among investors. In 2002, Spain was one of the pioneer EU member countries to regulate audit quality and protect auditor independence. In the specific setting of Spain, the objective of this research is to obtain evidence that can contribute to the debate on whether there is a need for regulation in this field. In this sense, we find evidence on the existence of an expectations gap between two groups of agents affected by the important changes that the 2002 rules on independence and audit quality imposed on auditors, i.e., the auditors themselves and the academics who educate future auditors. Our results point out that there is an expectations gap both in terms of independence in fact and in appearance for certain items under study, as well as in the area of improvement in audit quality or in the opinions on how these regulatory changes are expected to affect auditors' activities.