Potential Threats to Audit Firm Independence: Evidence from Italy on Audit Quality

Purpose – This study aims to investigate the potential threats independence of an auditor who provides both auditing and non-audit services (NAS), in terms credibility confidence audit quality.
 
 Design/methodology/approach In this study, we first replicate results Campa Donnelly (2016) using hand-collected publicly available data for a sample 91 Italian manufacturing public companies audited by Big 4 non-Big firm over longer time horizon (2015˗2019) panel approach, based on three interconnected regression models.
 Findings Previous studies area did not find unique interpretation association between provision NAS. Our findings reveal that independence, as measured magnitude discretionary accruals, is compromised NAS, especially when unexpected fees are lower than expected. Enhanced can lead greater value. study’s should be interest European U.S. legislators, improve financial reporting Originality/value wake global crisis loss role auditors, investigates supposed threats, aim enhance quality, settings outside Anglosphere. would contribute literature support more binding approach firms.