This research was designed to evaluate the potential independence problem posed by CPAs who accept employment with ex-client firms. First, CPA firm data concerning how frequently auditors actually leave public accounting to accept employment with client firms is reported. Next, the reactions of selected users of accounting data and CPAs to a hypothetical case are studied. The case is designed to permit the impact of two variables on perceived independence to be evaluated: (1) the time lapse between auditing and working for a client firm; and (2) the rank of the ex-auditor. The results revealed that the perceived severity of the independence problem was different for the two groups, and that the time and rank variables significantly influenced the responses of both the users and the CPAs.

Discussion regarding whether to require management to make earnings forecasts public has been based, in part, on the existing evidence concerning published management earnings forecasts. This article evaluates certain attributes of forecast firms in an effort to determine whether currently produced forecasts are representative of what might be produced by all firms if forecasts were mandatory. The results of the various tests all suggest that previous research findings may not provide a sound basis for a policy decision on forecasting.