Abstract

http://ssrn.com/abstract=1463494
 
 

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Audit Committee Compensation and the Demand for Monitoring of the Financial Reporting Process


Ellen Engel


University of Chicago Booth School of Business

Rachel M. Hayes


University of Utah - David Eccles School of Business

Xue Wang


Ohio State University - Fisher College of Business

July 31, 2009

Journal of Accounting and Economics, Forthcoming

Abstract:     
We examine the relation between audit committee compensation and the demand for monitoring of the financial reporting process. We find that total compensation and cash retainers paid to audit committees are positively correlated with audit fees and the impact of the Sarbanes-Oxley Act, our proxies for the demand for monitoring. Our results are robust to the inclusion of audit committee quality, measured as the committee chair financial expertise. Our results suggest a recent willingness by firms to deviate from the historically prevalent one-size-fits-all approach to director pay in response to increased demands on audit committees and differential director expertise.

Number of Pages in PDF File: 47

Keywords: audit committees, board of director compensation, audit fees

JEL Classification: G30, M41, M49

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Date posted: August 28, 2009  

Suggested Citation

Engel, Ellen and Hayes, Rachel M. and Wang, Xue, Audit Committee Compensation and the Demand for Monitoring of the Financial Reporting Process (July 31, 2009). Journal of Accounting and Economics, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1463494

Contact Information

Ellen Engel
University of Chicago Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-0966 (Phone)
866-377-52152 (Fax)
Rachel M. Hayes
University of Utah - David Eccles School of Business ( email )
1645 E Campus Center Dr
Salt Lake City, UT 84112-9303
United States
Xue Wang (Contact Author)
Ohio State University - Fisher College of Business ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States
614-688-1330 (Phone)
614-292-2118 (Fax)
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