CEO Cultural Heritage and the Pricing of Audit Services

Forthcoming at Journal of Business Finance & Accounting

50 Pages Posted: 1 Mar 2022

See all articles by Anh Pham

Anh Pham

Newcastle Business School, University of Newcastle

Mia Pham

Massey University

Cameron Truong

Monash University; Financial Research Network (FIRN)

Date Written: December 29, 2021

Abstract

We construct preferences towards risk and uncertainty as reflected in the cultural heritage of CEOs managing public firms in the U.S. We demonstrate that auditors take into account cultural traits of CEOs in the pricing of their audit services. We also show CEO cultural heritage is associated with a firm’s misreporting, internal control weakness, and accounting conservatism. The results are robust to controlling for other known attributes of CEOs, firm characteristics, and corporate governance. Our study contributes to research on corporate risk culture, CEO characteristics, and determinants of the pricing of audit services and financial reporting quality.

Keywords: corporate culture, cultural heritage, risk preference, uncertainty avoidance, audit pricing, CEOs, reporting quality

JEL Classification: G32, H25, H26, M40

Suggested Citation

Pham, Anh Viet and Pham, Mia and Truong, Cameron, CEO Cultural Heritage and the Pricing of Audit Services (December 29, 2021). Forthcoming at Journal of Business Finance & Accounting, Available at SSRN: https://ssrn.com/abstract=3996470

Anh Viet Pham (Contact Author)

Newcastle Business School, University of Newcastle ( email )

University Drive
Callaghan, NSW 2308
Australia

Mia Pham

Massey University ( email )

Private Bag 11 222
Palmerston North, Manawatu 4442
New Zealand

Cameron Truong

Monash University ( email )

23 Innovation Walk
Wellington Road
Clayton, Victoria 3800
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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