Auditor Independence, Audit Quality and Auditor-Client Negotiation Outcomes: Some Evidence from Taiwan

This study investigates auditor independence and audit quality in auditor-client negotiation over financial reporting issues using Taiwan data. We find a significant negative relation between non-audit services and the extent of client agreement with the auditor over financial reporting issues, consistent with non-audit services reducing independence. However, the interaction of non-audit fees with auditor tenure suggests that non-audit fees do not affect the auditor's ability to resist client management pressure when auditor tenure is longer. Clients are not more likely to agree with a Big 5 auditor, but are more likely to agree with auditors perceived to be industry specialists.