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Non-Audit fees and earnings management : Evidence from France
Julien Le Maux,
University Paris 1 Panthéon Sorbonne
ABSTRACT. The objective of this study investigates the relationship between firm characteristics and non-audit fees for French public companies. Moreover, this paper examines evidence in France whether non-audit fees are associated with earnings management. Utilizing data obtained from the new mandatory disclosure environment, we examine the magnitude and frequency of non-audit services. The paper approaches the question in several stages. (1) Based on a sample of 639 firms-years between 2002-2004, we present evidence that non-audit fees differs significantly between US and France. (2) We find significant relations between non-audit fees and size, litigation risk, firm complexity, and auditor quality (big four). (3) We do not find a significant association between abnormal accruals and non-audit fees. Our results are not sensitive to research design choices (Jones modified model or performance-adjusted accrual measure)
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