The Effect of affiliation on auditor independence

Nonna Martinov-Bennie, Roger Simnett, Jeffrey Cohen

Research output: Chapter in Book/Report/Conference proceedingConference proceeding contributionpeer-review


This study investigates whether different types of affiliation pose familiarity threat to auditor independence within a context of an ambiguous (higher v. lower level of ambiguity) audit issue. Using a 2 x 2 x 2 full factorial between subjects design we examine the effect of prior organizational affiliation (alumnus v. non-alumnus client CFO) and professional affiliation (ex-audit partner v. other services ex-partner CFO) on auditor independence (and resulting audit quality) as measured by a number of auditor judgments including the likelihood of accepting the client’s proposed accounting treatment, the preferred as well as the final negotiated dollar amount of the audit adjustment, the level of audit hours allocated and the reliance placed on the client’s CFO. We find no support for the alumni effect but professional (i.e. audit) affiliation appears to be a significant separate construct from the alumni effect. Perceived and actual level of ambiguity of the accounting issue often differ and it is the perceived ambiguity which is of significance. Overall these results indicate that in the post Enron environment auditors seem to be sensitive to independence risk and their independence does not appear to be impaired.
Original languageEnglish
Title of host publicationAmerican Accounting Association (AAA) Auditing Section 2006 Midyear Conference
Place of PublicationSydney, Australia
PublisherThe University of Sydney
Number of pages40
Publication statusPublished - 2006
Externally publishedYes
EventAmerican Accounting Association (AAA) Auditing Section 2006 Midyear Conference - Los Angeles, California
Duration: 12 Jan 200614 Jan 2006


ConferenceAmerican Accounting Association (AAA) Auditing Section 2006 Midyear Conference
CityLos Angeles, California


  • alumni effect
  • professional affiliation
  • ambiguity
  • auditor independence


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