The pricing of audit and non-audit services in a regulated environment: a longitudinal study of the UK life insurance industry

Klumpes, Paul J. M.; Komarev, Iliya; Eleftheriou, Konstantinos

doi:10.1080/00014788.2015.1056719

Cited by 10 publications

(7 citation statements)

References 51 publications

(40 reference statements)

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“…However, it is noticeable that most empirical studies on audit quality have focused mainly on the client's characteristics (e.g., size, complexity, and risk) (Simunic, 1980;Gul et al, 2013), and the client-auditor relationship (e.g., auditor tenure and the type of non-audit services) (O'Sullivan & Diacon, 2002;Klumpes et al, 2016) to explain variations in audit quality. In response to calls for empirical testing of the relationship between governance and audit quality (Al-Ajmi, 2009;Ben-Hassoun et al, 2018), this study seeks to investigate the impact of various firm-and country-level governance mechanisms on audit quality.…”

Section: Introductionmentioning

confidence: 99%

Antecedents of audit quality in MENA countries: The effect of firm- and country-level governance quality

Sarhan

Ntim

Al‐Najjar

2019

Journal of International Accounting, Auditing and Taxation

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This document may differ from the final, published version of the research and has been made available online in accordance with publisher policies. To read and/or cite from the published version of the research, please visit the publisher's website (a subscription may be required.) Antecedents of Audit Quality in MENA Countries:The Effect of Firm-and Country-Level Governance Quality This paper investigates the effect of firm-and country-level governance quality on audit quality, as measured by (i) auditor choice and (ii) audit fees. Our findings are three-fold. First, our evidence suggests that board independence is positively related to engaging a Big 4 auditor, while family shareholdings show a negative association with hiring a Big 4 auditor. Second, board size, board independence, and director shareholdings are positively related to audit fees, while government shareholdings and family shareholdings show a negative relationship with audit fees. Third, higher country-level governance quality is positively associated with hiring a Big 4 auditor and paying higher audit fees. Overall, we provide evidence that external audit quality in Middle Eastern and North African (MENA) countries is affected by firm-and country-level governance quality, which suggests that governance quality and external audit quality seem to be complements in protecting stakeholders interests through securing higher audit quality. Our results are robust to controlling for alternative measures and endogeneities.

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Section: Introductionmentioning

confidence: 99%

Antecedents of audit quality in MENA countries: The effect of firm- and country-level governance quality

Sarhan

Ntim

Al‐Najjar

2019

Journal of International Accounting, Auditing and Taxation

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“…Their results suggest that the demand for tax services gives rise to a higher demand for audit services and vice versa (cross-selling behaviour). Alexander and Hay (2013) and Klumpes et al (2016) test the associations between APTS fees and audit fees in New Zealand and the United Kingdom, respectively. While Alexander and Hay (2013) find that APTS fees are positively associated with audit fees, Klumpes et al (2016) find negative associations between these two types of fees in the UK life insurance industry.…”

Section: Input-based Factorsmentioning

confidence: 99%

“…Alexander and Hay (2013) and Klumpes et al (2016) test the associations between APTS fees and audit fees in New Zealand and the United Kingdom, respectively. While Alexander and Hay (2013) find that APTS fees are positively associated with audit fees, Klumpes et al (2016) find negative associations between these two types of fees in the UK life insurance industry. The former suggests that there is no issue of impaired independence, whereas the latter suggests the opposite.…”

Section: Input-based Factorsmentioning

confidence: 99%

Determinants and consequences of auditor‐provided tax services: A systematic review of the international literature

Sun

Habib

2021

Int J Auditing

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We review the empirical literature on the determinants and consequences of auditor-provided tax services (APTS) and provide some directions for future research.We first summarise two theoretical but competing perspectives on APTS provision, namely, the knowledge spillover effect and the impaired independence effect. We then review the evolution of APTS-related disclosures and regulations in selected jurisdictions. Our review of the determinants of APTS suggests that such decisions are related to the cost-benefit trade-off. We then review the literature on the consequences of APTS. This strand of the literature in the United States supports the knowledge spillover effect, but the findings in non-US settings are mixed. The market perceptions of APTS in both the US and non-US settings suggest that market participants react to APTS negatively during uncertain periods, whereas nonarchival studies suggest that the perceptions of APTS vary between stakeholder groups and with the types of APTS provided.

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“…Such concerns have motivated several rule-making bodies responsible for regulating the audit profession, especially in Western countries, to issue rules aimed at safeguarding auditors' independence from the possibly negative effects of providing NAS to audit clients, including the famous U.S. Sarbanes & Oxley Act. Additionally, the joint provision issue has long attracted the interest of academics and has been a focus of investigation of extensive audit research (e.g., Simunic, 1984;Beck, Frecka, & Solomon, 1988b;Barkess & Simnett, 1994;Hay, Knechel, & Li , 2006;Basioudis, Papakonstantinou, & Geiger, 2008;Davis & Hollie, 2008;Ye, Carson, & Simnett, 2011;Klumpes, Komarev, & Eleftheriou, 2016;Park, Choi, & Cheung, 2017). This line of audit research has typically sought examining whether the joint provision of audit and NAS to audit clients can lead to jeopardizing auditors' independence.…”

Section: Introductionmentioning

confidence: 99%

The Impact Of The Joint Provision Of Non-Audit Services On Audit Firm’s Tenure: A Kuwaiti Evidence

Al-Hajri

2017

JABR

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Concerns about the potential harm of the increased economic bond between the audit firm and the audit client resulting from the joint provision of audit and NAS have been investigated extensively in the audit literature. However, much of this research was conducted in developed countries’ settings, with very little, if any, carried out in the context of a developing country. The current study aims at filling this gap in audit research by investigating two important issues related to the joint provision using data from the Kuwaiti audit market. First, this study examines whether there is an association between the provision of NAS to the audit client and audit firm’s tenure as a surrogate of audit independence. Second, the current study aims at examining factors expected to influence clients’ purchase of NAS in the Kuwaiti audit market. Contrary to expectations, the results reveal a negative relationship between the joint provision and external audit firm’s tenure, suggesting that such a joint provision does not lead to the impairment of auditor independence. Results obtained from the NAS purchase logistic regression also show that audit client’s purchase of NAS from their audit firms is positively related to the amount of audit fees and client’s financial leverage.

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The pricing of audit and non-audit services in a regulated environment: a longitudinal study of the UK life insurance industry

Cited by 10 publications

References 51 publications

Antecedents of audit quality in MENA countries: The effect of firm- and country-level governance quality

Antecedents of audit quality in MENA countries: The effect of firm- and country-level governance quality

Determinants and consequences of auditor‐provided tax services: A systematic review of the international literature

The Impact Of The Joint Provision Of Non-Audit Services On Audit Firm’s Tenure: A Kuwaiti Evidence

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