Executive Equity Risk-Taking Incentives and Audit Pricing

• 成果类型: Article
• 署名作者: Chen, Yangyang; Gul, Ferdinand A.; Veeraraghavan, Madhu; Zolotoy, Leon
• 署名单位: Hong Kong Polytechnic University; Monash University; University of Melbourne
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-51046
• 发表日期: 2015
• 页码: 2205-2234
• 关键词: Litigation risk; corporate governance; firm performance; earnings quality; BUSINESS RISK; STOCK-OPTIONS; Section 404; fees; IMPACT; reputation

摘要

Using a large sample of U.S. firms spanning the period 2000-2010, we document a strong positive association between the sensitivity of CEO compensation portfolio to stock return volatility (vega) and audit fees. We also show that the positive association between vega and audit fees is weaker in the post-Sarbanes-Oxley Act (SOX) period. In supplementary tests, we show that the relation between vega and audit fees is stronger for firms with older CEOs and in firms where the CEO is also chairman of the board. Collectively, our results suggest that audit firms incorporate executive risk-taking incentives in the fees they charge for their services.