Are Independent Audit Committee Members Objective? Experimental Evidence

• 成果类型: Article
• 署名作者: Magilke, Matthew J.; Mayhew, Brian W.; Pike, Joel E.
• 署名单位: Utah System of Higher Education; University of Utah; University of Wisconsin System; University of Wisconsin Madison; University of Illinois System; University of Illinois Urbana-Champaign
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2009.84.6.1959
• 发表日期: 2009
• 页码: 1959-1981
• 关键词: Reputation; COMPENSATION; DIRECTORS; BOARD

摘要

We use experimental markets to examine stock-based compensation's impact on the objectivity of participants serving as audit committee members. We compare audit committee member reporting objectivity under three regimes: no stockbased compensation, stock-based compensation linked to current shareholders, and stock-based compensation linked to future shareholders. Our experiments show that student participants serving as audit committee members prefer biased reporting when compensated with stock-based compensation. Audit committee members compensated with current stock-based compensation prefer aggressive reporting, and audit committee members compensated with future stock-based compensation prefer overly conservative reporting. We find that audit committee members who do not receive stock-based compensation are the most objective. Our study suggests that stockbased compensation impacts audit committee member preferences for biased reporting, suggesting the need for additional research in this area.