Non-audit fees, disclosure and audit quality
- 1 July 1999
- journal article
- research article
- Published by Taylor & Francis Ltd in European Accounting Review
- Vol. 8 (2), 239-252
- https://doi.org/10.1080/096381899336014
Abstract
This paper investigates the effect of non-audit services on audit quality. Following the announcement of the requirement to disclose non-audit fees, approximately one-third of UK quoted companies disclosed before the requirement became effective. Whilst distressed companies were more likely to disclose early, auditor size, directors' shareholdings and non-audit fees were not significantly correlated with early disclosure. These results cast doubt on the view that voluntary disclosure of non-audit fees was used to signal audit quality. The evidence also indicates a positive weakly significant relationship between disclosed non-audit fees and audit qualifications. This suggests that when non-audit fees are disclosed, the provision of non-audit services does not reduce audit quality.Keywords
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