Auditor compensation, disclosure quality, and market liquidity: Evidence from the stock market
Previous studies on the effects of auditor compensation on disclosure quality have focused on accounting measures, such as earnings management, discretionary accruals, and restatements. In contrast, we investigate the impact of fees paid for audit and non-audit services on a market-based measure of...
Gespeichert in:
| Veröffentlicht in: | Journal of accounting and public policy 2005-07, Vol.24 (4), p.325-354 |
|---|---|
| Hauptverfasser: | , , |
| Format: | Artikel |
| Sprache: | eng |
| Schlagworte: | |
| Online-Zugang: | Volltext |
| Tags: |
Tag hinzufügen
Keine Tags, Fügen Sie den ersten Tag hinzu!
|
| container_end_page | 354 |
|---|---|
| container_issue | 4 |
| container_start_page | 325 |
| container_title | Journal of accounting and public policy |
| container_volume | 24 |
| creator | Ascioglu, Asli Hegde, Shantaram P. McDermott, John B. |
| description | Previous studies on the effects of auditor compensation on disclosure quality have focused on accounting measures, such as earnings management, discretionary accruals, and restatements. In contrast, we investigate the impact of fees paid for audit and non-audit services on a market-based measure of disclosure quality and stock market liquidity. Based on a large sample of NYSE-traded S&P 1500 stocks, we find only weak evidence to support the argument that auditor compensation lowers firm disclosure quality and market liquidity. This finding is robust to alternative measures of bid-ask spreads and asymmetric information costs of trading. In addition, we find some evidence to suggest that the adverse effects of auditor compensation on market liquidity are concentrated in firms with weak corporate governance mechanisms. Our results underscore the need to revisit the rationale and scope of restrictions on non-audit services imposed recently by the Sarbanes-Oxley Act. |
| doi_str_mv | 10.1016/j.jaccpubpol.2005.05.002 |
| format | Article |
| fullrecord | <record><control><sourceid>proquest_cross</sourceid><recordid>TN_cdi_proquest_miscellaneous_37695378</recordid><sourceformat>XML</sourceformat><sourcesystem>PC</sourcesystem><els_id>S0278425405000293</els_id><sourcerecordid>37695378</sourcerecordid><originalsourceid>FETCH-LOGICAL-c389t-8ff999e839fe8d19e2e6f081d641973327b9493ab2d6e1471a56470c147a48933</originalsourceid><addsrcrecordid>eNqFkE1r3DAQhkVpoNtN_4Pooad4oy9bUm9pSJuWQC_JtUIrj4kc2_JK8sL--8psaKGXwow0DM87zLwIYUp2lNDmut_11rl52c9h2DFC6t0ahL1BG6okrxiR5C3aECZVJVgt3qH3KfWEEMlEvUG_bpbW5xCxC-MMU7LZh-kKtz65IaQlAj4sdvD5dIXt1OLRxhfIePCHxRfd6TO-O_oWJge4i2HE-RlwysG9vJKX6KKzQ4IPr_8WPX29e7y9rx5-fvt-e_NQOa50rlTXaa1Bcd2BaqkGBk1HFG0bQbXknMm9FprbPWsboEJSWzdCEldKK5TmfIs-nefOMRwWSNmM5QIYBjtBWJLhstE1l6qAH_8B-7DEqexmGBWCUl24LVJnyMWQUoTOzNGXg06GErO6bnrz13Wzum7WIKxIf5ylEWZwf3QA0Nt5hY-GWybKc1qLVcmtL7m25pKclU4tzHMey7Av52FQrDt6iCY5v5rd-ggumzb4_2_0G5sbqV0</addsrcrecordid><sourcetype>Aggregation Database</sourcetype><iscdi>true</iscdi><recordtype>article</recordtype><pqid>214411995</pqid></control><display><type>article</type><title>Auditor compensation, disclosure quality, and market liquidity: Evidence from the stock market</title><source>RePEc</source><source>PAIS Index</source><source>Elsevier ScienceDirect Journals</source><creator>Ascioglu, Asli ; Hegde, Shantaram P. ; McDermott, John B.</creator><creatorcontrib>Ascioglu, Asli ; Hegde, Shantaram P. ; McDermott, John B.</creatorcontrib><description>Previous studies on the effects of auditor compensation on disclosure quality have focused on accounting measures, such as earnings management, discretionary accruals, and restatements. In contrast, we investigate the impact of fees paid for audit and non-audit services on a market-based measure of disclosure quality and stock market liquidity. Based on a large sample of NYSE-traded S&P 1500 stocks, we find only weak evidence to support the argument that auditor compensation lowers firm disclosure quality and market liquidity. This finding is robust to alternative measures of bid-ask spreads and asymmetric information costs of trading. In addition, we find some evidence to suggest that the adverse effects of auditor compensation on market liquidity are concentrated in firms with weak corporate governance mechanisms. Our results underscore the need to revisit the rationale and scope of restrictions on non-audit services imposed recently by the Sarbanes-Oxley Act.</description><identifier>ISSN: 0278-4254</identifier><identifier>EISSN: 1873-2070</identifier><identifier>DOI: 10.1016/j.jaccpubpol.2005.05.002</identifier><identifier>CODEN: JACPDN</identifier><language>eng</language><publisher>New York: Elsevier Inc</publisher><subject>Adverse selection ; Asymmetric information ; Auditing ; Auditor compensation ; Auditors ; Business accounting ; Compensation ; Corporate governance ; Disclosure ; Empirical tests ; Financial information ; Financial reporting ; Liquidity ; Market structure ; Public Company Accounting Reform & Investor Protection Act 2002-US ; Sarbanes-Oxley ; Securities markets ; Stock exchange ; Studies ; U.S.A ; Wages & salaries</subject><ispartof>Journal of accounting and public policy, 2005-07, Vol.24 (4), p.325-354</ispartof><rights>2005</rights><rights>Copyright Elsevier Sequoia S.A. Jul/Aug 2005</rights><lds50>peer_reviewed</lds50><woscitedreferencessubscribed>false</woscitedreferencessubscribed><citedby>FETCH-LOGICAL-c389t-8ff999e839fe8d19e2e6f081d641973327b9493ab2d6e1471a56470c147a48933</citedby><cites>FETCH-LOGICAL-c389t-8ff999e839fe8d19e2e6f081d641973327b9493ab2d6e1471a56470c147a48933</cites></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><linktohtml>$$Uhttps://dx.doi.org/10.1016/j.jaccpubpol.2005.05.002$$EHTML$$P50$$Gelsevier$$H</linktohtml><link.rule.ids>314,777,781,3537,3994,27847,27905,27906,45976</link.rule.ids><backlink>$$Uhttp://econpapers.repec.org/article/eeejappol/v_3a24_3ay_3a2005_3ai_3a4_3ap_3a325-354.htm$$DView record in RePEc$$Hfree_for_read</backlink></links><search><creatorcontrib>Ascioglu, Asli</creatorcontrib><creatorcontrib>Hegde, Shantaram P.</creatorcontrib><creatorcontrib>McDermott, John B.</creatorcontrib><title>Auditor compensation, disclosure quality, and market liquidity: Evidence from the stock market</title><title>Journal of accounting and public policy</title><description>Previous studies on the effects of auditor compensation on disclosure quality have focused on accounting measures, such as earnings management, discretionary accruals, and restatements. In contrast, we investigate the impact of fees paid for audit and non-audit services on a market-based measure of disclosure quality and stock market liquidity. Based on a large sample of NYSE-traded S&P 1500 stocks, we find only weak evidence to support the argument that auditor compensation lowers firm disclosure quality and market liquidity. This finding is robust to alternative measures of bid-ask spreads and asymmetric information costs of trading. In addition, we find some evidence to suggest that the adverse effects of auditor compensation on market liquidity are concentrated in firms with weak corporate governance mechanisms. Our results underscore the need to revisit the rationale and scope of restrictions on non-audit services imposed recently by the Sarbanes-Oxley Act.</description><subject>Adverse selection</subject><subject>Asymmetric information</subject><subject>Auditing</subject><subject>Auditor compensation</subject><subject>Auditors</subject><subject>Business accounting</subject><subject>Compensation</subject><subject>Corporate governance</subject><subject>Disclosure</subject><subject>Empirical tests</subject><subject>Financial information</subject><subject>Financial reporting</subject><subject>Liquidity</subject><subject>Market structure</subject><subject>Public Company Accounting Reform & Investor Protection Act 2002-US</subject><subject>Sarbanes-Oxley</subject><subject>Securities markets</subject><subject>Stock exchange</subject><subject>Studies</subject><subject>U.S.A</subject><subject>Wages & salaries</subject><issn>0278-4254</issn><issn>1873-2070</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2005</creationdate><recordtype>article</recordtype><sourceid>X2L</sourceid><sourceid>7TQ</sourceid><recordid>eNqFkE1r3DAQhkVpoNtN_4Pooad4oy9bUm9pSJuWQC_JtUIrj4kc2_JK8sL--8psaKGXwow0DM87zLwIYUp2lNDmut_11rl52c9h2DFC6t0ahL1BG6okrxiR5C3aECZVJVgt3qH3KfWEEMlEvUG_bpbW5xCxC-MMU7LZh-kKtz65IaQlAj4sdvD5dIXt1OLRxhfIePCHxRfd6TO-O_oWJge4i2HE-RlwysG9vJKX6KKzQ4IPr_8WPX29e7y9rx5-fvt-e_NQOa50rlTXaa1Bcd2BaqkGBk1HFG0bQbXknMm9FprbPWsboEJSWzdCEldKK5TmfIs-nefOMRwWSNmM5QIYBjtBWJLhstE1l6qAH_8B-7DEqexmGBWCUl24LVJnyMWQUoTOzNGXg06GErO6bnrz13Wzum7WIKxIf5ylEWZwf3QA0Nt5hY-GWybKc1qLVcmtL7m25pKclU4tzHMey7Av52FQrDt6iCY5v5rd-ggumzb4_2_0G5sbqV0</recordid><startdate>200507</startdate><enddate>200507</enddate><creator>Ascioglu, Asli</creator><creator>Hegde, Shantaram P.</creator><creator>McDermott, John B.</creator><general>Elsevier Inc</general><general>Elsevier</general><general>Elsevier Sequoia S.A</general><scope>DKI</scope><scope>X2L</scope><scope>AAYXX</scope><scope>CITATION</scope><scope>7TQ</scope><scope>8BJ</scope><scope>DHY</scope><scope>DON</scope><scope>FQK</scope><scope>JBE</scope></search><sort><creationdate>200507</creationdate><title>Auditor compensation, disclosure quality, and market liquidity: Evidence from the stock market</title><author>Ascioglu, Asli ; Hegde, Shantaram P. ; McDermott, John B.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c389t-8ff999e839fe8d19e2e6f081d641973327b9493ab2d6e1471a56470c147a48933</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2005</creationdate><topic>Adverse selection</topic><topic>Asymmetric information</topic><topic>Auditing</topic><topic>Auditor compensation</topic><topic>Auditors</topic><topic>Business accounting</topic><topic>Compensation</topic><topic>Corporate governance</topic><topic>Disclosure</topic><topic>Empirical tests</topic><topic>Financial information</topic><topic>Financial reporting</topic><topic>Liquidity</topic><topic>Market structure</topic><topic>Public Company Accounting Reform & Investor Protection Act 2002-US</topic><topic>Sarbanes-Oxley</topic><topic>Securities markets</topic><topic>Stock exchange</topic><topic>Studies</topic><topic>U.S.A</topic><topic>Wages & salaries</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Ascioglu, Asli</creatorcontrib><creatorcontrib>Hegde, Shantaram P.</creatorcontrib><creatorcontrib>McDermott, John B.</creatorcontrib><collection>RePEc IDEAS</collection><collection>RePEc</collection><collection>CrossRef</collection><collection>PAIS Index</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>PAIS International</collection><collection>PAIS International (Ovid)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Journal of accounting and public policy</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Ascioglu, Asli</au><au>Hegde, Shantaram P.</au><au>McDermott, John B.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Auditor compensation, disclosure quality, and market liquidity: Evidence from the stock market</atitle><jtitle>Journal of accounting and public policy</jtitle><date>2005-07</date><risdate>2005</risdate><volume>24</volume><issue>4</issue><spage>325</spage><epage>354</epage><pages>325-354</pages><issn>0278-4254</issn><eissn>1873-2070</eissn><coden>JACPDN</coden><abstract>Previous studies on the effects of auditor compensation on disclosure quality have focused on accounting measures, such as earnings management, discretionary accruals, and restatements. In contrast, we investigate the impact of fees paid for audit and non-audit services on a market-based measure of disclosure quality and stock market liquidity. Based on a large sample of NYSE-traded S&P 1500 stocks, we find only weak evidence to support the argument that auditor compensation lowers firm disclosure quality and market liquidity. This finding is robust to alternative measures of bid-ask spreads and asymmetric information costs of trading. In addition, we find some evidence to suggest that the adverse effects of auditor compensation on market liquidity are concentrated in firms with weak corporate governance mechanisms. Our results underscore the need to revisit the rationale and scope of restrictions on non-audit services imposed recently by the Sarbanes-Oxley Act.</abstract><cop>New York</cop><pub>Elsevier Inc</pub><doi>10.1016/j.jaccpubpol.2005.05.002</doi><tpages>30</tpages></addata></record> |
| fulltext | fulltext |
| identifier | ISSN: 0278-4254 |
| ispartof | Journal of accounting and public policy, 2005-07, Vol.24 (4), p.325-354 |
| issn | 0278-4254 1873-2070 |
| language | eng |
| recordid | cdi_proquest_miscellaneous_37695378 |
| source | RePEc; PAIS Index; Elsevier ScienceDirect Journals |
| subjects | Adverse selection Asymmetric information Auditing Auditor compensation Auditors Business accounting Compensation Corporate governance Disclosure Empirical tests Financial information Financial reporting Liquidity Market structure Public Company Accounting Reform & Investor Protection Act 2002-US Sarbanes-Oxley Securities markets Stock exchange Studies U.S.A Wages & salaries |
| title | Auditor compensation, disclosure quality, and market liquidity: Evidence from the stock market |
| url | https://sfx.bib-bvb.de/sfx_tum?ctx_ver=Z39.88-2004&ctx_enc=info:ofi/enc:UTF-8&ctx_tim=2025-01-20T02%3A49%3A48IST&url_ver=Z39.88-2004&url_ctx_fmt=infofi/fmt:kev:mtx:ctx&rfr_id=info:sid/primo.exlibrisgroup.com:primo3-Article-proquest_cross&rft_val_fmt=info:ofi/fmt:kev:mtx:journal&rft.genre=article&rft.atitle=Auditor%20compensation,%20disclosure%20quality,%20and%20market%20liquidity:%20Evidence%20from%20the%20stock%20market&rft.jtitle=Journal%20of%20accounting%20and%20public%20policy&rft.au=Ascioglu,%20Asli&rft.date=2005-07&rft.volume=24&rft.issue=4&rft.spage=325&rft.epage=354&rft.pages=325-354&rft.issn=0278-4254&rft.eissn=1873-2070&rft.coden=JACPDN&rft_id=info:doi/10.1016/j.jaccpubpol.2005.05.002&rft_dat=%3Cproquest_cross%3E37695378%3C/proquest_cross%3E%3Curl%3E%3C/url%3E&disable_directlink=true&sfx.directlink=off&sfx.report_link=0&rft_id=info:oai/&rft_pqid=214411995&rft_id=info:pmid/&rft_els_id=S0278425405000293&rfr_iscdi=true |