THE ASSOCIATION BETWEEN AUDIT FEES AND CEO AGE

David Manry ； Yun-Chia Yan ； Mai Dao

《Advances in Quantitative Analysis of Finance and Accounting》 18期 (2021/12) Pp. 1-38

https://doi.org/10.6293/AQAFA.202112_(18).0001

摘要

This paper uses a sample of U.S. firms from 2007 to 2012 to test the association between audit fees and chief executive officer (CEO) age. Our results show that there is a significant negative association between audit fees and CEO age, after controlling for other influences identified in previous research to be associated with aggressive reporting practices, audit risk, other firm characteristics, and audit fees. In further tests, we partition our firm-year auditee sample into five age groups based on CEO age, and test the conditional association between CEO age and audit fees after controlling for the age quintile. We find that firms with CEOs in the lower age quintile exhibit a significantly positive association with audit fees, while firms with CEOs in the higher age quintile exhibit a significantly negative association with fees, as expected. We also find that the impact of CEO age on audit pricing has economic significance. Our evidence suggests that CEO age serves as a useful proxy for positive managerial qualities that may result in lower audit fees.

關鍵字

Chief Executive Officer (CEO) Age ； Risk Tolerance ； Audit Fees ； Audit Risk

參考文獻

Abbott, L., Parker, S., & Peters, G. F. (2004). Audit committee characteristics and restatements. AUDITING: A Journal of Practice & Theory, 23(1), 69-87. doi:10.2308/aud.2004.23.1.69.

Abbott, L., Parker, S., Peters, G., & Raghunandan, K. (2003). The association between audit committee characteristics and audit fees. AUDITING: A Journal of Practice & Theory, 22(2), 17-32. doi:10.2308/aud.2003.22.2.17.

Ali, A., & Zhang, W. (2015). CEO tenure and earnings management. Journal of Accounting and Economics, 59, 60-79. doi:10.1016/j.jacceco.2014.11.004.

Andreou, P. C., Louca, C., & Petrou, A. P. (2017). CEO age and stock price crash risk. Review of Finance, 21, 1287-1325. doi:10.1093/rof/rfw056.

Ashbaugh-Skaife, H., Collins, D. W., & Kinney, W. R., Jr. (2007). The discovery and consequences of internal control deficiencies prior to SOX-mandated audits. Journal of Accounting and Economics, 44, 166-192. doi:10.1016/ j.jacceco.2006.10.001