Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
7340016 | Advances in Accounting | 2016 | 11 Pages |
Abstract
This study investigates whether auditor perceptions of risk are affected by accretive stock repurchases, which prior research has suggested is a form of earnings management. We argue that auditors are likely to view earnings management conducted through the use of accretive stock repurchases as a signal of increased risk, leading to higher audit fees. Consistent with our hypothesis, we find evidence of a positive and significant association between the use of accretive stock repurchases as an earnings management technique and audit fees. The results suggest that audit fees are 6.0% higher when accretive stock repurchases are used to manage earnings, which corresponds to an audit fee that is approximately $107,000 higher for the average firm-year observation in our sample.
Related Topics
Social Sciences and Humanities
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Accounting
Authors
David B. Bryan, Terry W. Mason,