An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Magdy Farag
Kent State University

Abstract: This paper investigates the association between earnings management, measured by discretionary accruals, and nonaudit service fees. Using a sample of S&P 500 firms over a three years period, I examine this association among different level of earnings persistence. Results show a positive association between nonaudit service fees as a percentage of total audit fees and absolute discretionary accruals. Results also show that this association is stronger for firms with high levels of earnings persistence.

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