Non‐Audit Services and Knowledge Spillovers: Evidence from New Zealand

22 Pages Posted: 3 Mar 2012

See all articles by Warren Robert Knechel

Warren Robert Knechel

University of Auckland Business School

Divesh Sharma

Kennesaw State University, School of Accountancy

Vineeta D. Sharma

Kennesaw State University

Date Written: January/February 2012

Abstract

New Zealand provides a natural laboratory to test whether knowledge spillovers arise from auditor‐provided non‐audit services. Unlike prior research, we do not assume constant audit quality but first test whether audit quality varies with auditor‐provided non‐audit services and audit efficiency. Results show that higher non‐audit fees paid to the auditor in conjunction with shorter audit lag does not reduce the quality of the audit. Results reveal a negative association between non‐audit fees and audit lag, thus suggesting the presence of knowledge spillovers. However, the knowledge spillover effect is limited to the city office providing both the audit and non‐audit services.

Keywords: audit, audit quality, non‐audit, fee, knowledge spillover

Suggested Citation

Knechel, Warren Robert and Sharma, Divesh Shankar and Sharma, Vineeta D., Non‐Audit Services and Knowledge Spillovers: Evidence from New Zealand (January/February 2012). Journal of Business Finance & Accounting, Vol. 39, Issue 1‐2, pp. 60-81, 2012, Available at SSRN: https://ssrn.com/abstract=2015145 or http://dx.doi.org/10.1111/j.1468-5957.2011.02268.x

Warren Robert Knechel (Contact Author)

University of Auckland Business School ( email )

12 Grafton Rd
Private Bag 92019
Auckland, 1010
New Zealand

Divesh Shankar Sharma

Kennesaw State University, School of Accountancy ( email )

Kennesaw, GA 30144
United States

Vineeta D. Sharma

Kennesaw State University ( email )

1000 Chastain Road, MD 2205
Kennesaw, GA 30144
United States
1 770 794 7626 (Phone)
1 770 499 3420 (Fax)

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