Pub Date : 2022-09-14DOI: 10.1080/09638180.2022.2119153
Margaret A. Abernethy, Yunhe Dong, Yu Flora Kuang, Bo Qin, Xing Yang
We examine whether pay differentials between the chief executive officer (CEO) and vice presidents (VPs) can be explained by firms’ strategic priorities. We find that firms that pursue prospector-type strategies have a larger CEO−VP difference in equity compensation. We argue that such a pay differential relates to the relative authority that CEOs have in strategic decision-making, and we find that authority allocation based on a firm’s strategic priorities is consistent with the relative ability of the CEO vis-à-vis the VPs. Our results remain consistent after considering alternative explanations including CEO power, risk-taking incentives, and tournament incentives among VPs. Further analyses reveal that a large CEO−VP equity pay differential enhances firm value for prospector-type firms, and that shareholders and proxy advisors tend to incorporate firm strategy in their say-on-pay votes and proxy recommendations.
{"title":"Firm Strategy and CEO−VP Pay Differentials in Equity Compensation","authors":"Margaret A. Abernethy, Yunhe Dong, Yu Flora Kuang, Bo Qin, Xing Yang","doi":"10.1080/09638180.2022.2119153","DOIUrl":"https://doi.org/10.1080/09638180.2022.2119153","url":null,"abstract":"<p>We examine whether pay differentials between the chief executive officer (CEO) and vice presidents (VPs) can be explained by firms’ strategic priorities. We find that firms that pursue prospector-type strategies have a larger CEO−VP difference in equity compensation. We argue that such a pay differential relates to the relative authority that CEOs have in strategic decision-making, and we find that authority allocation based on a firm’s strategic priorities is consistent with the relative ability of the CEO vis-à-vis the VPs. Our results remain consistent after considering alternative explanations including CEO power, risk-taking incentives, and tournament incentives among VPs. Further analyses reveal that a large CEO−VP equity pay differential enhances firm value for prospector-type firms, and that shareholders and proxy advisors tend to incorporate firm strategy in their say-on-pay votes and proxy recommendations.</p>","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"15 10","pages":""},"PeriodicalIF":3.3,"publicationDate":"2022-09-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138503163","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-09-10DOI: 10.1080/09638180.2022.2116065
D. Ranasinghe, Luisa A. Unda, S. Wright
{"title":"Do women mind the non-GAAP? Board gender diversity and non-GAAP disclosure quality","authors":"D. Ranasinghe, Luisa A. Unda, S. Wright","doi":"10.1080/09638180.2022.2116065","DOIUrl":"https://doi.org/10.1080/09638180.2022.2116065","url":null,"abstract":"","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"23 1","pages":""},"PeriodicalIF":3.3,"publicationDate":"2022-09-10","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88147237","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-09-05DOI: 10.1080/09638180.2022.2116064
Abongeh A. Tunyi, Junhong Yang, Henry Agyei‐Boapeah, Michael Machokoto
{"title":"Takeover Vulnerability and Pre-Emptive Earnings Management","authors":"Abongeh A. Tunyi, Junhong Yang, Henry Agyei‐Boapeah, Michael Machokoto","doi":"10.1080/09638180.2022.2116064","DOIUrl":"https://doi.org/10.1080/09638180.2022.2116064","url":null,"abstract":"","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"189 1","pages":""},"PeriodicalIF":3.3,"publicationDate":"2022-09-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77355200","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-09-05DOI: 10.1080/09638180.2022.2113550
Ting Dong
This study documents the gender salary gap in the auditing profession and explains its development. Using Swedish administrative data from 2007 to 2015 for all Certified Public Accountants (CPAs), I find that the auditing profession’s overall gender salary gap has substantially narrowed during this period, and more female auditors have moved up to the top earnings group, reducing the wide salary gap at the top of the income distribution. Further analysis shows that the increase in female auditors’ client portfolio size accounts for approximately half of the decrease in the total salary gap. I also find evidence that the rise in female leadership in the Big Six firms is positively associated with the increase in female auditors’ client portfolio size. This effect is more pronounced in the middle and bottom half of firms’ hierarchy, suggesting that female representation at the top of a firm’s hierarchy has spillover benefits for lower-ranked female auditors. The implications of this study may help audit firms narrow their gender gaps and cope better with the overall talent challenges of the auditing industry.
{"title":"Gender Salary Gap in the Auditing Profession: Trend and Explanations","authors":"Ting Dong","doi":"10.1080/09638180.2022.2113550","DOIUrl":"https://doi.org/10.1080/09638180.2022.2113550","url":null,"abstract":"<p>This study documents the gender salary gap in the auditing profession and explains its development. Using Swedish administrative data from 2007 to 2015 for all Certified Public Accountants (CPAs), I find that the auditing profession’s overall gender salary gap has substantially narrowed during this period, and more female auditors have moved up to the top earnings group, reducing the wide salary gap at the top of the income distribution. Further analysis shows that the increase in female auditors’ client portfolio size accounts for approximately half of the decrease in the total salary gap. I also find evidence that the rise in female leadership in the Big Six firms is positively associated with the increase in female auditors’ client portfolio size. This effect is more pronounced in the middle and bottom half of firms’ hierarchy, suggesting that female representation at the top of a firm’s hierarchy has spillover benefits for lower-ranked female auditors. The implications of this study may help audit firms narrow their gender gaps and cope better with the overall talent challenges of the auditing industry.</p>","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"16 2","pages":""},"PeriodicalIF":3.3,"publicationDate":"2022-09-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138503162","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-08-29DOI: 10.1080/09638180.2022.2109706
Hui Chen, Alexander Wenning
{"title":"Higher-Order Beliefs, Market-Based Incentives, and Information Quality","authors":"Hui Chen, Alexander Wenning","doi":"10.1080/09638180.2022.2109706","DOIUrl":"https://doi.org/10.1080/09638180.2022.2109706","url":null,"abstract":"","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"24 1","pages":""},"PeriodicalIF":3.3,"publicationDate":"2022-08-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"89964681","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-08-29DOI: 10.1080/09638180.2022.2108094
Kay Blaufus, Jens Robert Schöndube, Stefan Wielenberg
{"title":"Information Sharing between Tax and Statutory Auditors: Implications for Tax Audit Efficiency","authors":"Kay Blaufus, Jens Robert Schöndube, Stefan Wielenberg","doi":"10.1080/09638180.2022.2108094","DOIUrl":"https://doi.org/10.1080/09638180.2022.2108094","url":null,"abstract":"","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"1 1","pages":""},"PeriodicalIF":3.3,"publicationDate":"2022-08-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"76389943","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2022-08-23DOI: 10.1080/09638180.2022.2087706
Vlad‐Andrei Porumb, Yasemin Zengin‐Karaibrahimoglu, Shuo Wang, Gerald J. Lobo
ABSTRACT An audit review (AR) is a mechanism used by boards to assess the quality of interim financial reports on a timely basis. In Canada, the AR is voluntary, with listed firms mandated to disclose when they choose to not purchase additional audit verification. Given the relatively low cost of an AR, opting out of it can be regarded as a negative signal, especially in the context of lenders’ sensitivity to downside risk. Using a sample of 7,585 firm-year observations from 1,616 public firms in Canada over the period 2004-2015, we document that firms without a voluntary AR have a higher cost of debt than firms with an AR. Furthermore, after firms opt out of the AR, the increase in the cost of debt is accompanied by a rise in discretionary abnormal accruals and managers’ stock-based compensation. Moreover, no-AR firms are more likely to reduce post-switch private borrowing and have lower equity analyst following. Our study is the first to document that although listed borrowers that opt out of an AR have a higher cost of debt financing, they are concurrently able to engage in more earnings management and grant their managers higher stock-based compensation because of lower external monitoring.
{"title":"Save Money to Lose Money? Implications of Opting Out of a Voluntary Audit Review for a Firm’s Cost of Debt*","authors":"Vlad‐Andrei Porumb, Yasemin Zengin‐Karaibrahimoglu, Shuo Wang, Gerald J. Lobo","doi":"10.1080/09638180.2022.2087706","DOIUrl":"https://doi.org/10.1080/09638180.2022.2087706","url":null,"abstract":"ABSTRACT An audit review (AR) is a mechanism used by boards to assess the quality of interim financial reports on a timely basis. In Canada, the AR is voluntary, with listed firms mandated to disclose when they choose to not purchase additional audit verification. Given the relatively low cost of an AR, opting out of it can be regarded as a negative signal, especially in the context of lenders’ sensitivity to downside risk. Using a sample of 7,585 firm-year observations from 1,616 public firms in Canada over the period 2004-2015, we document that firms without a voluntary AR have a higher cost of debt than firms with an AR. Furthermore, after firms opt out of the AR, the increase in the cost of debt is accompanied by a rise in discretionary abnormal accruals and managers’ stock-based compensation. Moreover, no-AR firms are more likely to reduce post-switch private borrowing and have lower equity analyst following. Our study is the first to document that although listed borrowers that opt out of an AR have a higher cost of debt financing, they are concurrently able to engage in more earnings management and grant their managers higher stock-based compensation because of lower external monitoring.","PeriodicalId":11764,"journal":{"name":"European Accounting Review","volume":"199 1","pages":"1207 - 1232"},"PeriodicalIF":3.3,"publicationDate":"2022-08-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83523297","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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