Auditor independence and auditor bargaining power

some Spanish evidence concerning audit error in the going concern decision

Paul Barnes*, Marcos Antón Renart

*Corresponding author for this work

Research output: Contribution to journalArticle

9 Citations (Scopus)


It is well known that where an auditor's relative bargaining power is high, this may help its independence and prevent a Type II error (no qualification but corporate failure). It is less well known that this may also lead to a lack of independence in the form of over-conservatism and an unjustified inclination by an auditor to qualify to protect its reputation leading to a Type I error (a qualification but no corporate failure). We therefore hypothesize that there is a positive relationship between the auditor's relative bargaining power and Type I errors ('H') and a negative relationship between it and Type II errors ('H'). The empirical study supports H but rejects H. Taken together, these results suggest that Spanish auditors have a high propensity to qualify to protect their reputation, undeterred by pressure from client companies, in order to protect their reputation - 'over-conservatism' as we have called it.

Original languageEnglish
Pages (from-to)265-287
Number of pages23
JournalInternational Journal of Auditing
Issue number3
Publication statusPublished - Nov 2013

Fingerprint Dive into the research topics of 'Auditor independence and auditor bargaining power: some Spanish evidence concerning audit error in the going concern decision'. Together they form a unique fingerprint.

Cite this