Auditor independence Research Paper Example | Topics and Well Written Essays - 1000 words

Auditor independence - Research Paper ExampleWithout independence, Arya & Glover (2014, p. 188) believes that there is no need for external auditors attestation to the purported accuracy and the completeness of the company financial information. The adverse effects of auditors providing services to clients that dedicate them at present question the impairment of auditor independence. An association between fees received by the audit firms directly from the clients will possibly impair auditor independence with particular interest to the going concern insurance coverage decision that continues to have considerable interest to the regulators and others.This paper studies Arthur Andersen clients and investigates whether the decline in Andersens problems due to a cruel indictment can adversely affect the stock market perception of its audit quality. The reputations concerns are an know on the impairment of the auditors independence. Arya & Glover (2014, p. 190) investigates the rela tionship between abnormal market returns for the Andersen clients and the fee-based measures of auditor independence. The empirical results support the ideology that auditor independence and reputation can significantly affect the perceived auditor quality and credibleness in the audited financial statements as well as the market prices.The paper will also grant empirical evidence on the efficacy of auditors and directors that apply aggressive financial reporting that have accruals. In that light, the paper will investigate a sample of United States firms to evaluate the auditors independence on the clients. correspond to (), aggressive financing reporting will only occur when multiple governance mechanism fails. The overreliance of SOX-type statute cannot act as a substitute for strong governance mechanisms in the regulation.Paterson & Valencia (2011, p. 1510) assert that Arthur Andersens perceives audit chastening of Enron and other publicized accounting