 Is mandated independence necessary for audit quality?Karim Jamal and Shyam Sunder Accounting, Organizations and Society, 2011, vol. 36, issue 4, 284-292 Abstract: Independence (in fact as well as in appearance) is widely thought to be necessary for the quality of audits, and audit quality is often equated with independence. Private incentives to demand (and supply) independent certification of financial statements are thought to be insufficient, thus the need to mandate independence through regulation. This study presents data from a field experiment on the unregulated market for certification of baseball cards to assess the role of independence vis-à-vis other auditor attributes such as competence, price, and service on audit quality. In our field experiment, we examine prices of baseball cards sold on eBay with or without third party certification. In addition, the certifier was either independent or deeply immersed in providing other services to market participants. We find that market participants pay a significant premium for certified cards. Certifiers who are deeply immersed (and therefore apparently less independent) also provide higher quality service in the form of being stricter graders, command larger price premiums, and dominate in market share. Implications for independence and audit quality are discussed. Date: 2011 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:aosoci:v:36:y:2011:i:4:p:284-292 DOI: 10.1016/j.aos.2011.03.001 Access Statistics for this article Accounting, Organizations and Society is currently edited by Christopher Chapman More articles in Accounting, Organizations and Society from Elsevier |
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