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Executive equity risk-taking incentives and audit pricing
journal contribution
posted on 2015-11-01, 00:00 authored by Y Chen, Ferdinand GulFerdinand Gul, M Veeraraghavan, L ZolotoyUsing 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 risktaking incentives in the fees they charge for their services.
History
Journal
Accounting reviewVolume
90Issue
6Pagination
2205 - 2234Publisher
American Accounting AssociationLocation
Sarasota, Flo.Publisher DOI
ISSN
0001-4826Language
engPublication classification
C1.1 Refereed article in a scholarly journal; C Journal articleCopyright notice
2015, American Accounting AssociationUsage metrics
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