Recently, the independence of auditor has become a center of attention. One of the major discussions is the relationship between audit tenure and the auditor independence. The opinions regarding this topic have been divided into two different perspectives. One is the assertion that the auditor independence is damaged by longer audit tenure (auditor entrenchment hypothesis), while the other assertion is that longer the audit tenure, better the audit quality due to the enhancement on the expertise of the auditor (auditor expertise hypothesis). Also there has been a historical debate on whether the problem of independence is actually occurred due to either independence in appearance or in mind, although investors and capital market consider the independence in appearance mostly as evaluation criteria for auditor independence. This debate is still ongoing and has not been resolved yet. This research presents the solution to these questions. This study investigates how the improvement or the deterioration of audit quality due to audit tenure is perceived by the market and examines the difference between the independence in mind and independence in appearance. By doing so, we have discovered significant difference between the independence in mind and the independence in appearance during the study. Empirical results provide evidence indicating that as the audit tenure increases, the earnings persistence, a proxy for the audit quality, is increased as well. This implies that longer audit tenure do not impair the quality of audit, rather it will be enhanced due to improvement in the auditor expertise. However, investors value the firm with short audit tenure as the firm with strong persistence in earnings. This outcome can be interpreted that the auditor independence is at the highest level during the early period of the audit tenure, and therefore, the higher level of audit service is provided. In conclusion, independence in mind is not impaired by the audit tenure, but investor’s stereotype that shorter audit tenure guarantees higher independence in appearance creates the gap and misunderstanding on audit tenure. This is an indication that the independence in mind should be separated from the audit independence in appearance. This evidence tells us that controversy involved with the auditor independence is mostly a matter of independence in appearance, not the appearance in mind. This study attempts to segregate the independence in appearance and independence in mind while investigating the relationship of audit tenure and auditor independence. We believe that the outcome of the study enables us to understand the relationship between these two factors. At the same time, it may provide the set of standards when enacting the policy regarding the audit tenure regulation.