Do Investors' Perceptions Vary with Types of Nonaudit Fees? Evidence from Auditor Ratification Voting

• DOI: 10.2308/aud.2005.24.2.9
• Publication Date: 2008-04-11T23:12:33Z
• Authors: Suchismita Mishra; K. Raghunandan; Dasaratha V. Rama
• Keywords: Auditor independence; Ratification

In FRR No. 68, the SEC (2003b) updated rules related to disclosure of fees paid independent auditor by requiring more detailed information about nonaudit fees. The (2002, 2003b) asserted that partition into categories audit-related, tax, and other would be useful for investors in assessing auditor's independence voting on ratifying auditor. suggested view audit-related tax services favorably than “other” services. this paper we test SEC's assertions examining shareholder ratification votes, during 2003, at 248 S&P 1500 firms. Our results support assertion differently two types However, contrary assertion, both fee ratio have a positive association with proportion votes against ratification. provide empirical PCAOB's recent initiative examine between independence. can client managements audit committees considering purchases from auditors. findings also suggest it may replicate some prior studies (that use single measure fees) using newer, finely partitioned, data.