Journal article
Managerial Ability, Financial Distress, and Audit Fees
Accounting Horizons, Vol.32(1), pp.29-51
2018
Abstract
This study examines whether the relationship between managerial ability and audit fees is conditional on financial distress. We find that higher managerial ability increases audit fees in financially distressed firms and decreases audit fees in non distressed firms. We also observe that financially distressed firms with higher ability managers display lower accrual quality and a higher likelihood of restatement. Moreover, higher ability managers in distressed firms engage more in opportunistic financial reporting to concurrently maximize equity based compensation and cope with debt refinancing pressures, which increases audit risks and results in greater audit fees. We confirm our results using a battery of sensitivity and additional analyses.
Details
- Title
- Managerial Ability, Financial Distress, and Audit Fees
- Authors
- Ferdinand A. Gul (Author) - Deakin UniversityMehdi Khedmati (Author) - Monash UniversityEdwin KiaYang Lim (Author) - Deakin UniversityFarshid Navissi (Author) - Monash University
- Publication details
- Accounting Horizons, Vol.32(1), pp.29-51
- Publisher
- American Accounting Association
- DOI
- 10.2308/acch-51888
- ISSN
- 1558-7975
- Organisation Unit
- University of the Sunshine Coast, Queensland; School of Business and Creative Industries
- Language
- English
- Record Identifier
- 99679191102621
- Output Type
- Journal article
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- Business, Finance
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