Generalist CEOs and Audit Pricing
Autor: | Rencheng Wang, Zhiming Ma, Kaitang Zhou |
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Rok vydání: | 2021 |
Předmět: |
History
Economics and Econometrics Polymers and Plastics ComputingMilieux_THECOMPUTINGPROFESSION business.industry Instrumental variable ComputingMilieux_PERSONALCOMPUTING Principal–agent problem ComputingMilieux_LEGALASPECTSOFCOMPUTING Accounting Audit Audit risk Generalist and specialist species Business risks Affect (psychology) Industrial and Manufacturing Engineering ComputingMilieux_MANAGEMENTOFCOMPUTINGANDINFORMATIONSYSTEMS Corporate law Business and International Management business Path analysis (statistics) Finance |
Zdroj: | AUDITING: A Journal of Practice & Theory. 40:123-147 |
ISSN: | 1558-7991 0278-0380 |
Popis: | SUMMARY We analyze the consequences of a firm hiring a generalist CEO in terms of the audit fees paid by the firm. We find that audit fees of clients with generalist CEOs are higher than those of clients with specialist CEOs. This relation is robust to considering managerial ability, other CEO characteristics, various fixed effects, instrumental variables, and change analyses. We further show that fee differences are larger for firms with weaker monitoring and higher corporate litigation risks. Through path analysis, we find that both client business risk and misreporting risk contribute to the fee difference. Finally, we find that auditors are more likely to issue going-concern opinions to clients with generalist CEOs. Our study should be of interest to auditing standard setters who link management operating styles to audit risk. We shed light on how management operating styles associated with the CEOs' general or specialized skills affect audit pricing. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M41; M42. |
Databáze: | OpenAIRE |
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