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題名 Is Audit Committee Equity Compensation Related to Audit Fees?
作者 俞洪昭
Yu, Hung‐Chao
Liu, Xinming
Lobo, Gerald J.
貢獻者 會計系
關鍵詞 audit committee; audit fees; auditor independence; equity compensation; comité d`audit; frais d`audit; indépendance des auditeurs; rémunération par actions
日期 2020-09
上傳時間 26-五月-2021 10:30:56 (UTC+8)
摘要 Section 301 of the Sarbanes‐Oxley Act (SOX) implicitly assumes that audit committees can independently determine audit fees. Critics of section 301 have questioned this assumption in particular, and the efficacy of section 301 more generally. In response, the SEC issued a concept release in 2015 calling for public disclosure of the process that audit committees follow for determining auditor compensation. Motivated by these calls and the widespread use of stocks and options to compensate firms` independent directors, we examine the relation between equity compensation granted to audit committee members and audit fees. Using a sample of 3,685 firm‐year observations during 2007–2015, we find a negative relation between audit committee equity compensation and audit fees, consistent with larger equity pay inducing audit committee members to compromise independence by paying lower audit fees. These findings are robust to controlling for endogeneity, firm size, alternative measures of equity compensation, alternative samples, and an alternative treatment of extreme values. We further show that larger equity compensation is associated with lower earnings quality. We also find that the negative effect of equity compensation on audit fees is stronger when city‐level audit market competition is high. However, this negative relation disappears when (i) firms face high litigation risk, (ii) auditors have stronger bargaining power, (iii) the audit committee includes a high proportion of accounting experts, and (iv) auditors are industry experts. Our results are relevant for regulators and investors.
關聯 Contemporary Accounting Research, 38:1, 740-769
資料類型 article
DOI https://doi.org/10.1111/1911-3846.12632
dc.contributor 會計系
dc.creator (作者) 俞洪昭
dc.creator (作者) Yu, Hung‐Chao
dc.creator (作者) Liu, Xinming
dc.creator (作者) Lobo, Gerald J.
dc.date (日期) 2020-09
dc.date.accessioned 26-五月-2021 10:30:56 (UTC+8)-
dc.date.available 26-五月-2021 10:30:56 (UTC+8)-
dc.date.issued (上傳時間) 26-五月-2021 10:30:56 (UTC+8)-
dc.identifier.uri (URI) http://nccur.lib.nccu.edu.tw/handle/140.119/135139-
dc.description.abstract (摘要) Section 301 of the Sarbanes‐Oxley Act (SOX) implicitly assumes that audit committees can independently determine audit fees. Critics of section 301 have questioned this assumption in particular, and the efficacy of section 301 more generally. In response, the SEC issued a concept release in 2015 calling for public disclosure of the process that audit committees follow for determining auditor compensation. Motivated by these calls and the widespread use of stocks and options to compensate firms` independent directors, we examine the relation between equity compensation granted to audit committee members and audit fees. Using a sample of 3,685 firm‐year observations during 2007–2015, we find a negative relation between audit committee equity compensation and audit fees, consistent with larger equity pay inducing audit committee members to compromise independence by paying lower audit fees. These findings are robust to controlling for endogeneity, firm size, alternative measures of equity compensation, alternative samples, and an alternative treatment of extreme values. We further show that larger equity compensation is associated with lower earnings quality. We also find that the negative effect of equity compensation on audit fees is stronger when city‐level audit market competition is high. However, this negative relation disappears when (i) firms face high litigation risk, (ii) auditors have stronger bargaining power, (iii) the audit committee includes a high proportion of accounting experts, and (iv) auditors are industry experts. Our results are relevant for regulators and investors.
dc.format.extent 194312 bytes-
dc.format.mimetype application/pdf-
dc.relation (關聯) Contemporary Accounting Research, 38:1, 740-769
dc.subject (關鍵詞) audit committee; audit fees; auditor independence; equity compensation; comité d`audit; frais d`audit; indépendance des auditeurs; rémunération par actions
dc.title (題名) Is Audit Committee Equity Compensation Related to Audit Fees?
dc.type (資料類型) article
dc.identifier.doi (DOI) 10.1111/1911-3846.12632
dc.doi.uri (DOI) https://doi.org/10.1111/1911-3846.12632