The Accounting Review · 2015 · 138 citations · 72 references
BusinessAccountancyCorporate GovernanceAuditingCorporate FinanceExecutive CompensationAgency CostsBoard OversightFinancial OversightFinancial RiskInternal AuditInternal AuditingCeo Equity CompensationCompensation Risk-taking IncentivesEquity IncentivesEquity Return VolatilityExecutive Compensation DecisionsExecutive Compensation EffectsExecutive Pay IncentivesStock Return Performance
ABSTRACT 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. JEL Classifications: M41; M42; M52.
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A Caution Regarding Rules of Thumb for Variance Inflation Factors
Robert M. O’Brien · Quality & Quantity · 2007 · 10.5K citations
Detecting Earnings Management.
Patricia Dechow, Richard G. Sloan · The Accounting Review · 1995 · 5.9K citations · Full text
Business, Accountancy, Accounting +17