The purchase of non-audit services from incumbent auditors has generated considerable attention. Surprisingly, limited empirical evidence exists on the association of non-audit services with firm value. Focusing on services related to financial information system (FIS), we find that the market value of equity is greater for firms that purchase FIS-related services from their incumbent auditors relative to firms that do not. The levels of FIS fees are also positively related to firm value after controlling for total other fees, or total other non-audit fees. Hence, despite the negative perception associated with non-audit services, investors regard FIS-related services as value-adding activities. Copyright (c) The Authors. Journal compilation (c) 2009 AFAANZ.
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Article provided by Accounting and Finance Association of Australia and New Zealand in its journal Accounting & Finance.