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Auditor Independence, Audit Fees Lowballing, And Non-Audit Services: Evidence From Fiji

Author

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  • Arvind Patel
  • Pranil Prasad

Abstract

This study empirically examines the supply side of the market for non-audit services. In particular, a model for the supply side of the market for non-audit services is developed. This model is then tested using audit and non-audit fee data from Fijian listed companies from the year 1980 to 2010. We find that audit fee low-balling leads to increased supply of non-audit services. This result is statistically significant. We also find that Big 4 auditors supply less non-audit services compared to non-Big 4 auditors. Finally, we find that the longer the auditor tenure the lower the supply of non-audit services. However, both these results are statistically insignificant. This leads to a conclusion that non-audit services are being supplied for opportunistic reasons as opposed to efficiency reasons. Our results are robust to a number of sensitivity checks.

Suggested Citation

  • Arvind Patel & Pranil Prasad, 2013. "Auditor Independence, Audit Fees Lowballing, And Non-Audit Services: Evidence From Fiji," Accounting & Taxation, The Institute for Business and Finance Research, vol. 5(2), pages 103-120.
    • Handle: RePEc:ibf:acttax:v:5:y:2013:i:2:p:103-120
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Auditor Independence; Audit Fees; Non-Audit Fees;
    All these keywords.

    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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