The influence of earnings management conducted through the use of accretive stock repurchases on audit fees
Document Type
Article
Publication Date
9-1-2016
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.
Publication Title
Advances in Accounting
Volume
34
First Page
99
Last Page
109
Digital Object Identifier (DOI)
10.1016/j.adiac.2016.08.001
ISSN
08826110
Citation Information
Bryan, & Mason, T. W. (2016). The influence of earnings management conducted through the use of accretive stock repurchases on audit fees. Advances in Accounting, 34, 99–109. https://doi.org/10.1016/j.adiac.2016.08.001