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The demand for non-audit services and auditor-client relationships: evidence from Swedish small and medium-sized enterprises
BI Norwegian Business School & Umeå School of Business.
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE). Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Business Administration.
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
Abstract [en]

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.
Keyword [en]
Non-audit services, demand, reputation, experience, knowledge spillovers, small and medium-sized enterprises, length of the auditor-client relationship
National Category
Social Sciences
URN: urn:nbn:se:umu:diva-47479DOI: 10.1111/j.1099-1123.2011.00441.xOAI: diva2:442507
Available from: 2011-09-21 Created: 2011-09-21 Last updated: 2012-10-22Bibliographically approved

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Sundgren, Stefan
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