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THE ROLE OF CONSULTING SERVICES ON AUDIT MARKET
AND MARKET WELFARE
Sebahattin Demirkan,
University of Texas at Dallas
ABSTRACT. I examine the role of consulting services in audit markets. Since the early 1990s the autonomy of auditors in the performance of their professional duties has always been considered a cornerstone of the profession. This is shown by the many rulings of professional bodies on this issue, the elaborate rules of conduct designed to strengthen autonomy, the many articles in professional journals devoted this issue with special term independence. Several of past studies suggest also that joint provision of audit and non-audit services may give rise to knowledge spillovers that could lead to economic rents. When auditors are the agents hired by firms to express opinions about their financial statements and are paid by the firms, how does the provision of consulting services with auditing services and quality of the auditors affect the auditor market?
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