The Effect of auditor-provided non-audit services on auditor independence and Sarbanes-Oxley: What separates tax services from other non-audit services?

dc.contributorAalto-yliopistofi
dc.contributorAalto Universityen
dc.contributor.authorLeino, Lasse
dc.contributor.departmentLaskentatoimen laitosfi
dc.contributor.departmentDepartment of Accountingen
dc.contributor.schoolKauppakorkeakoulufi
dc.contributor.schoolSchool of Businessen
dc.date.accessioned2014-01-31T07:20:00Z
dc.date.available2014-01-31T07:20:00Z
dc.date.dateaccepted2013-06-27
dc.date.issued2013
dc.description.abstractObjectives of the Study: The Sarbanes-Oxley Act prohibited a large number of individual auditor-provided non-audit services, which were seen to have a negative effect on auditor independence. Tax services were not included in the list, implying that the effects of these services should somehow differ from those of other consulting services. Research on all non-audit services however has yielded contradictory results. This study sets out to illustrate the possible effects of tax services using prior research on all services as a framework, and attempts to shed some light on the issue whether the effects of tax services actually are significantly different from those of the other non-audit services. Research Method and Data: The methods used in the paper follow the research of Frankel et al. (2002) which approaches independence concerns by examining whether strong economic bonds between auditor and client lead to opportunistic earnings management through the use of discretionary accruals. A modification to the method also allows a separate examination of auditor-provided tax services. The sample used in the models consists of financial statements from 2415 individual North American firms for the financial year 2010. Findings of the Study: This study provides heteroscedasticity-robust evidence that there is no statistically significant association between auditor-provided tax services and earnings management. The results are robust to differences in auditor fee composition, to the direction of earnings management as well as to audit client firm size. Since the goal of this paper and the methods used in it is not to measure possible knowledge spillovers, one can only speculate whether the absence of such an association could mean that there are no audit-quality improving knowledge spillovers retainable from the provision of tax services, or that the provision of tax services simply does not have an effect on auditor independence.en
dc.ethesisid13480
dc.format.extent80
dc.format.mimetypeapplication/pdfen
dc.identifier.urihttps://aaltodoc.aalto.fi/handle/123456789/12245
dc.identifier.urnURN:NBN:fi:aalto-201401311293
dc.language.isoenen
dc.locationP1 Ifi
dc.programme.majorAccountingen
dc.programme.majorLaskentatoimifi
dc.subject.heleconlaskentatoimi
dc.subject.heleconaccounting
dc.subject.helecontilintarkastus
dc.subject.heleconauditing
dc.subject.heleconverotus
dc.subject.helecontaxation
dc.subject.keywordauditor independence
dc.subject.keywordauditor-provided tax services
dc.subject.keywordearnings management
dc.titleThe Effect of auditor-provided non-audit services on auditor independence and Sarbanes-Oxley: What separates tax services from other non-audit services?en
dc.typeG2 Pro gradu, diplomityöfi
dc.type.dcmitypetexten
dc.type.ontasotMaster's thesisen
dc.type.ontasotPro gradu tutkielmafi
local.aalto.idthes13480
local.aalto.openaccessyes
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