CEO Behavioral Integrity, Auditor Responses, and Firm Outcomes

• 成果类型: Article
• 署名作者: Dikolli, Shane S.; Keusch, Thomas; Mayew, William J.; Steffen, Thomas D.
• 署名单位: University of Virginia; INSEAD Business School; Duke University; Yale University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-52554
• 发表日期: 2020
• 页码: 61-88
• 关键词: ANNUAL-REPORT READABILITY; Impression management; Managerial ability; Textual analysis; CURRENT EARNINGS; LANGUAGE USE; voice pitch; disclosure; overconfidence; analysts

摘要

We investigate the audit fee response to CEO behavioral integrity (BI). BI refers to the perceived congruence between an individual's words and deeds (Simons 2002). Because low word-deed congruence should result in more explanations when communicating, we use variation in explanations beyond firm fundamentals and CEO-specific characteristics in more than 30,000 shareholder letters to serve as a linguistic-based proxy for CEO BI. We find that audit fees increase as BI decreases, but BI is not associated with financial misstatement or litigation. These findings are potentially consistent with auditors undertaking additional work in response to low BI, which, in turn, mitigates the risk of restatements and lawsuits. The likelihood of option backdating increases as BI decreases, consistent with the contention that auditors lacked incentives to prevent backdating. Finally, BI is increasing in future performance, which suggests that CEOs partially underpin the returns to high-integrity corporate cultures.