Association between Auditor Independence and Earning Conservatism : Evidence From the Audit Quality and Litigation Risk

• Main Authors: Yun-Yun Tsai, 蔡芸芸
• Other Authors: none
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/12555286639147543120

碩士 === 中原大學 === 會計研究所 === 96 === In recent years, the issue of auditor independence has been persuasively discussed due to the frequent occurrence of financial statement fraud. This study aims to investigate, in the view of litigation risk and audit quality, the relationship between auditor independence and conservative attitude toward client’s accounting methods. This research samples listed companies whose audit fees and non-audit fees from 2002 to 2006 are disclosed. To analyze whether audit independence is affected by litigation risk and audit quality, three conditions including whether the enterprise is overseas listed, how much market share the accounting firm holds and what level the client concentration of the accounting firm is are considered and treated as proxy variables for the measurement of litigation risk and audit quality. As for the relationship between auditor independence and accounting conservatism towards audit client, the results of this study show that no consistent evidence is found to support a positive correlation between auditor independence and accounting conservatism towards audit client. However, to conduct a further investigation into the influence of litigation risk and audit quality on auditor independence, the accruals and Basu reverse regression model mainly show that as a company is with higher litigation risk and an accounting firm is with better audit quality, the audit on client’s accounting method will tend to be more conservatively.