The Impact of Non-Audit Services on Institutional Investors' Perception of Auditor Independence: Evidence from Turkey

Abstract

In recent years, audit profession was confronted with different regulations, revised rules on non-audit services (NAS) and on auditor independence. In depth, professional accountancy bodies amended their independence rules according to Sarbanes-Oxley Act of 2002. For instance, the Securities Exchange Commission (SEC) and the American Institute of Certified Public Accountants (AICPA) in the USA, Capital Market Board (SPK) in Turkey made amendments to their independence rules on non-audit services and on auditor independence in light of the Sarbanes-Oxley Act of 2002. The purpose of this paper is to examine whether non-audit services jeopardize institutional investors’ perception of auditor independence in Turkey. Therefore, questionnaire was administered to 34 institutional investors in Istanbul, Turkey. It was generally found that institutional investors’ perception of auditor independence is not impaired at the time of joint provision of NAS and audit services to an audit client.