In this study we examine the effect of auditor economic bonding (financial dependency on a client) on audit quality. We consider financial dependency as either abnormally high fees in relation to expected hours or vice versa. We consider audits to have credence goods properties where the client...

Prior research has shown that auditors who learn superiors' views before making their own judgment are influenced by them (e.g., Peecher 1996; Tan et al. 1997; Cohen and Trompeter 1998; Brown et al. 1999; Wilks 2002). We use the theory of motivated reasoning (Kunda 1990, 1999) to examine the malleability of...