60 European J. International Management, Vol. 3, No. 1, 2009 Copyright © 2009 Inderscience Enterprises Ltd. Auditor independence and corporate governance: ethical dilemmas Waymond Rodgers A. Gary Anderson Graduate School of Management, University of California, Riverside, CA, 92521, USA E-mail: waymond.rodgers@ucr.edu Andrés Guiral* and José A. Gonzalo Facultad de CC.EE y Empresariales, University of Alcalá, Plaza de la Victoria 2, Alcalá de Henares 28802, Madrid, Spain E-mail: andres.guiral@uah.es E-mail: josea.gonzalo@uah.es *Corresponding author Abstract: Auditors’ primary function in society is as purveyors of opinions for reliable and relevant information. Many company failures have highlighted whether auditors have a conflict of interest problem. At the root of auditors’ lack of independence, issues are conflicts of interest resulting from the structural features of auditor–client relationship. The throughput model is advanced in order to explain how six dominant ethical positions deal with conflicts of interest problems and corporate governance issues. Finally, a discussion of potential solutions to improve ethical issues is offered for future research. Keywords: auditing; conflicts of interest; decision-making; ethics; throughput model; warning signals; going concern opinion. Reference to this paper should be made as follows: Rodgers, W., Guiral, A. and Gonzalo, J.A. (2009) ‘Auditor independence and corporate governance: ethical dilemmas’, European J. International Management, Vol. 3, No. 1, pp.60–74. Biographical notes: Waymond Rodgers, PhD, is a CPA and Professor in the A. Gary Anderson Graduate School of Management, University of California, Riverside, USA. His experiences include working as an auditor with Ernst and Young and PriceWaterhouseCoopers as well as a commercial loan officer with Union Bank. His primary research areas are auditing, commercial lending decisions, decision modelling, ethics, trust issues, intellectual capital and knowledge management. He has published in the Accounting & Finance, Communication of the ACM, European Accounting Review, Journal of Business Ethics, Journal of Applied Social Psychology, Journal of Economic Psychology, Management Science, among other journals.