The demand for non-audit services and auditor-client relationships: evidence from Swedish small and medium-sized enterprises
2012 (English)In: International Journal of Auditing, ISSN 1090-6738, E-ISSN 1099-1123, Vol. 16, no 1, 54-78 p.Article in journal (Refereed) Published
The joint provision of audit and non-audit services byincumbent auditors has been intensively debated in theliterature. The basic issue is that, while non-audit services canimpair auditor independence, knowledge spillovers from theseservices can reduce the audit cost. This is an importanttrade-off for small and medium-sized enterprises (SMEs) thatdepend on their auditors for non-audit services. Using datafrom 322 Swedish SMEs, this study investigates the choice ofpurchasing non-audit services from the incumbent auditor andother audit firms. We hypothesize, and find, that the lengthof the auditor-client relationship is positively related to thepurchase of non-audit services from incumbent auditors. Also,we find a positive association between perceived quality ofaudit services and the likelihood of a client purchasingnon-audit services from the auditor. However, unlike studiesof publicly traded companies, agency variables do not drive thepurchase of non-audit services by SMEs.
Place, publisher, year, edition, pages
Wiley-Blackwell, 2012. Vol. 16, no 1, 54-78 p.
Non-audit services, demand, reputation, experience, knowledge spillovers, small and medium-sized enterprises, length of the auditor-client relationship
IdentifiersURN: urn:nbn:se:umu:diva-47479DOI: 10.1111/j.1099-1123.2011.00441.xOAI: oai:DiVA.org:umu-47479DiVA: diva2:442507