J. Global Business Advancement, Vol. X, No. X, xxxx 1 Copyright © 200x Inderscience Enterprises Ltd. An empirical investigation of the Libyan audit market: perceptions of auditor’s independence Shamsaddeen Khamis Faraj and Saeed Akbar* University of Liverpool, Management School, Chatham Street, L69 7ZH, UK E-mail: shamsaddeen.faraj@liverpool.ac.uk E-mail: sakbar@liverpool.ac.uk *Corresponding author Abstract: Auditor independence has received considerable attention in recent years. This is due to the fact that independently audited financial statements may result in the generation of true and fair accounting information which will help stakeholders to form rational expectations about firms and minimise the agency cost. It can also be argued that lack of independence would lead auditors to collaborate with the management of firms and would produce misleading accounting information. Accepting this premise, this study explores the effects of 12 different variables on the perceptions of auditor independence in Libya. A sample of five user groups namely; owners, investors, lenders, managers and auditors were chosen for the survey. The results suggest that all user groups regard auditor independence as an important factor in forming their decisions about firms. Amongst other variables, the non-availability of auditing standards in Libya is found to be the strongest factor which undermines auditor independence in Libya. Keywords: Libyan audit market; auditing; audit regulation; auditor independence; developing countries. Reference to this paper should be made as follows: Faraj, S.K. and Akbar, S. (xxxx) ‘An empirical investigation of the Libyan audit market: perceptions of auditor’s independence’, J. Global Business Advancement, Vol. x, No. x, pp.xx–xx. Biographical notes: Shamsaddeen Khamis Faraj is a Teaching Assistant of Accounting at the University of 7th April in Libya. He is currently, a PhD Student at the University of Liverpool Management School. His main research interest includes auditing, the auditor’s independence and accounting regulation in Libya. Dr. Saeed Akbar received his PhD from Manchester Business School in 2001. He is currently working at the University of Liverpool Management School. His research interests include: market-based accounting research, financial accounting and reporting, management accounting, auditing, intangibles and the financing of SMEs in the UK. He has supervised more than ten PhD students and published his research in reputed international journals; like Journal of Business Finance and Accounting, International Journal of Management Reviews, The International Journal of Accounting, etc. He received a number of awards during his career.