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The Relation Between Auditors' Fees for Non-Audit Services and Earnings Management

The Relation Between Auditors' Fees for Non-Audit Services and Earnings Management

Frankel, Richard M., Johnson, Marilyn F. and Nelson, Karen K., "The Relation Between Auditors' Fees for Non-Audit Services and Earnings Management" (July 2002). MIT Sloan Working Paper No. 4330-02.

Abstract:

    This paper examines whether auditor fees are associated with earnings management and the market reaction to the disclosure of auditor fees. Using data collected from proxy statements, we present evidence that non-audit fees are positively associated with small positive earnings surprises, the magnitude of absolute discretionary accruals, and the magnitude of income-increasing and income-decreasing discretionary accruals. In contrast, audit fees are negatively associated with these earnings management indicators. These results are robust to a variety of alternative variable definitions and model specifications. Specifically, contrary to the claims of Ashbaugh et al. (2002), the results are robust to the use of performance-matched discretionary accruals. Moreover, contrary to the claims of Francis and Ke (2002), the results for small positive earnings surprises are robust regardless of whether the comparison group is all other earnings surprises or small negative earnings surprises. Our final set of results provide evidence of a significant negative association between non-audit fees and share values on the date the fees were disclosed, although the effect is small in economic terms.
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Facts on voip

  • Protocols used to carry voice signals over the IP network are commonly referred to as Voice over IP or VoIP protocols. They may be viewed as commercial realizations of the experimental Network Voice Protocol (1973) invented for the ARPANET.
  • Keeping packet latency acceptable can also be a problem, due to network routing time (buffering, switching) and transmission distances (more relevant under satellite links).
  • Take your VoIP phone with you on a trip, and anywhere you connect it to the Internet, you can receive your incoming calls. Call center agents using VoIP phones can work from anywhere with a sufficiently fast Internet connection.

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