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Discretionary accounting accruals, managers' incentives, and audit fees

Version 2 2024-06-04, 06:53
Version 1 2016-10-07, 15:27
journal contribution
posted on 2024-06-04, 06:53 authored by Ferdinand GulFerdinand Gul, CJP CHEN, JSL TSUI, HKP University
This paper examines the linkages between discretionary accruals (DAs), managerial share ownership, management compensation, and audit fees. It draws on the theory that managers of firms with high management ownership are likely to use DAs to communicate value-relevant information, while managers of firms with high accounting-based compensation are likely to use DAs opportunistically to manage earnings to improve their compensation. OLS regression results of 648 Australian firms show that (1) there is a positive association between DAs and audit fees; (2) managerial ownership negatively affects the positive relationship between DAs and audit fees; and (3) this negative impact is further found to be weaker for firms with high accounting-based management compensation.

History

Journal

Contemporary accounting research

Volume

20

Season

Fall

Pagination

441-464

Location

[Canada]

ISSN

0823-9150

Language

eng

Publication classification

C Journal article, C1.1 Refereed article in a scholarly journal

Copyright notice

2003, CAAA

Issue

3

Publisher

Canadian Academic Accounting Association