Audit and non-audit fees and capital market perceptions of auditor independence

Aloke (Al) Ghosh*, Sanjay Kallapur, Doocheol Moon

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

81 Citations (Scopus)


This study provides evidence on whether auditor independence-in-appearance, proxied by earnings response coefficients, is related to the non-audit fee ratio (non-audit to total fees from a client) or client importance (total fees from a client as a percentage of the total revenues of the audit firm). The results from large samples over the period 2001-2006 show, contrary to popular belief and the findings of some prior studies, that there is no evidence of a relation between perceived auditor independence and the non-audit fee ratio. However, perceived auditor independence is negatively associated with client importance, consistent with the economic theory of auditing. Our paper adds to the literature by examining the relative importance of non-audit fee ratios and client importance as determinants of independence-in-appearance.

Original languageEnglish
Peer-reviewed scientific journalJournal of Accounting and Public Policy
Issue number5
Pages (from-to)369-385
Number of pages17
Publication statusPublished - 01.09.2009
MoE publication typeA1 Journal article - refereed


  • 512 Business and Management
  • Audit fees
  • Non-audit fees
  • Independence-in-appearance
  • Earnings response coefficients
  • Non-audit fee ratio
  • Client importance


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