PurposeThe objective of the study is to provide empirical evidence of the impact of non‐audit services (NAS) as well as other auditor characteristics on auditor independence by testing the relationship of NAS fees to the occurrence of financial statement restatements.Design/methodology/approachThe authors tested whether firms that restate their financial statements have higher levels of total service fees or higher levels of NAS fees than non‐restatement firms. The testing also includes an examination of the relationship between the audit firm size and the audit firm industry specialization to financial statement restatements.FindingsThe study found only limited evidence to support the concept that firms with higher NAS fees are more likely to restate earnings, thereby casting doubt on the public perception that NAS impairs auditor independence and the legislative approval of Section 201 of the Sarbanes‐Oxley Act prohibiting external auditors from providing certain NAS to audit clients as necessary to preserve auditor independence. The study did find stronger evidence that the level of total fees paid to the audit firm is significant in the predictability of a restatement. In addition, the study also found stronger and more conclusive evidence of a negative association to audit firm industry specialization and a strong positive association to Big 5 audit firms.Practical implicationsResults demonstrate the necessity of regulations concerning NAS and conflict of interest.Originality/valueThis paper is an original contribution that demonstrates the importance of auditor characteristics over audit fees in predicting earnings management.

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Purpose -The paper seeks to address four key Top Management Team (TMT) demographic characteristics in their relationship with firm performance: age, functional background, educational field, and team tenure. The study extends research on the TMT by explicitly introducing team performance as a new context measured in the form of International Risk Management Factor, in addition to demographic characteristic effects. International Risk Management Factor is developed based on multiple international risks trading off theory. In order to calculate that factor International Risk Management Index is introduced. Design/methodology/approach -In the paper a sample of 212 firms was used, including 4,009 executives; also four hypotheses were tested. The hypotheses were tested using multiple regression analysis. Findings -The findings in this paper support the proposition that top management team is an appropriate unit of study, due to its impact on firm performance. The results indicate that there is a significant correlation between TMT demographic characteristics and firm performance. This study concluded that three of the proposed four TMT demographic characteristics, including age, functional background, and team tenure influence firm performance. Results validate the proposition that TMT demographic characteristics show a significant positive correlation with firm performance, particularly when the accounting measure is applied. In addition, Top Management Team performance was positively correlated to team tenure, suggesting that as team tenure progresses team performance improves. Originality/value -The paper differs in many features from previous research. Some of the most important aspects include scope of the study, scale of the sample, complexity of the moderated variable, uniqueness of moderated variable operationalization, and innovation in calculating International Risk Management Factor. For the first time, the study focuses exclusively on Top Management Team performance. The concept, which captures complexity of all TMT characteristics, is not included in demographic characteristics of TMT.