Excess Audit Committee Compensation and Audit Pricing
International Journal of Accounting, Auditing and Performance Evaluation, Vol. 14, No. 2/3, 2018
Posted: 24 Aug 2017 Last revised: 21 Apr 2018
Date Written: August 20, 2017
In this study, we explore audit pricing decisions in the presence of excess audit committee compensation. Specifically, we examine whether excess compensation of audit committee members is related to audit fees. We find that excess compensation is positively associated with audit fees. We further examine whether the excess compensation affects auditors pricing of earnings manipulation, and find evidence suggesting that auditors perceive earnings manipulation risk relatively low when the audit committee members are paid excess compensation. Overall, our results support the notion that audit committee excess compensation represents greater monitoring over a firms financial reporting process, which affects auditors' risk assessment.
Keywords: audit committee, compensation, audit fees
JEL Classification: M41, M42
Suggested Citation: Suggested Citation