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Belief Revision Among Accounting Practitioners Regarding the Effect of Nonaudit Services on Auditor Independence
Philip Beaulieu,
University of Calgary
Alan Reinstein, Wayne State University
ABSTRACT. We examine if practitioners adjust their belief systems when seeing pertinent evidence; and examine how much academic accounting literature affects practitioners. We study the effect on belief revisions of Frankel et al.’s and Ashbaugh et al.’s contrasting findings regarding nonaudit fee ratios and earnings management relationships. We measure cognitive dissonance by surveying small-firm non-auditors and auditors plus large-firm non-auditors and auditors. We predicted small-firm non-auditors, having chosen neither to work in large firms nor to specialize in auditing, would most likely think that independence could be impaired and would most likely revise their beliefs. Our data supports this result, but the fee question was not significant. The overall results suggest that as evidence regarding the effectiveness of key Sarbanes-Oxley Act provisions arises, accounting practitioners will interpret it using their own specializations and firm affiliations.
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