Disclosure of fees paid to auditors and the market valuation of earnings surprises

• 成果类型: Article
• 署名作者: Francis, Jere R.; Ke, Bin
• 署名单位: University of Missouri System; University of Missouri Columbia; Pennsylvania Commonwealth System of Higher Education (PCSHE); Pennsylvania State University; Pennsylvania State University - University Park
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-006-9014-z
• 发表日期: 2006
• 页码: 495-523
• 关键词: NONAUDIT SERVICES; INDEPENDENCE

摘要

We investigate if the SEC's recently mandated disclosure of fees for audit and nonaudit services paid by firms to their incumbent auditors affected the market's perception of auditor independence and earnings quality. Following the initial fee disclosures in 2001, we find that the market valuation of quarterly earnings surprises (earnings response coefficient) was significantly lower for firms with high levels of nonaudit fees than for firms with low levels of such fees. In contrast, in the year prior to the new fee disclosures, there was no reduction in earnings response coefficients for firms that subsequently reported high nonaudit fees. Our evidence suggests that mandated fee disclosures provided new information that was viewed by the market as relevant to appraising auditor independence and earnings quality.