The effect of nonaudit services on the pricing of audit services: further evidence

Article Abstract:

A study of audit fees incurred by 298 public and closely held firms that use Big Eight auditors relates audit fee levels to the provision of nonaudit services by the accounting firms. Nonaudit services include tax work, accounting-related management advisory services, and non-accounting management advisory services. The findings of the research support earlier findings of the 1984 investigation performed by D.A. Simunic. The findings are that: audit fees are higher for Big Eight audit clients that also contract for nonaudit services, especially when such nonaudit services are in the area of accounting-related management advisory services. The findings are not sufficient to support the assumption of joint supply theories with regard to audit fees, although joint supply theories may be affecting the fees for nonaudit services.

Services, Accounting firms, Accounting services, Accountants, Business consultants, Management consultants, Management audit, Management audits

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The value of auditor assurance: evidence from loan pricing

Article Abstract:

The financial value of services provided by independent auditors is studied by means of analyzing auditor associations and their possible impact on reduced interest rates on revolving credit agreements. Private firms select one of four levels of auditor association, namely, audits, reviews, compilations and company-prepared statements. It is assumed that interest rate benefits of auditor assurance fluctuate with enterprise size. Researchers analyzed the link between interest rates on revolving bank loans to small private firms and the degree of auditor association with the financial statements provided to the lender. Empirical evidence suggests that audited firms pay significantly lower interest rates than non-audited firms.

Commercial Banks, Commercial Banking, Accounting, auditing, & bookkeeping, Accounting & Auditing Services, Accounting, Tax Preparation, Bookkeeping, and Payroll Services, Business Financing, Accounting and auditing, Practice, Interest rates, Auditors, Loans, Finance charges

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Why press coverage of a client influences the audit opinion

Article Abstract:

The author finds that press coverage of a company's falling finances can affect the auditor's opinions.

Analysis, Mass media industry, Influence

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