دانلود رایگان مقاله انگلیسی تاثیر برنامه های بازنشستگی شرکت بر قیمت گذاری حسابرسی - الزویر 2017

Abstract

We examine whether corporate pension plans of client firms (hereafter, clients) influence auditors’ decisions on audit pricing for the clients in the U.S. We find that, on average, auditors charge higher fees for auditing financial statements of client firms sponsoring defined benefits (DB) pension plans than matched firms without DB pension plans. Moreover, we find that the effect of DB pension plans on audit fees is stronger when clients’ earnings are more sensitive to DB pension estimates, or when managers’ compensation induces more risk taking. Finally, we find that the additional audit fees charged for clients with DB pension plans are negatively associated with the extent of manipulations of DB pension accounting estimates. Collectively, our findings suggest that auditors consider managers’ incentive to manipulate earrings and increase audit effort to reduce audit risk associated with DB pension accounting, which results in higher audit fees.

5. Conclusions and Directions for Further Research

In this paper, we examine the effect of corporate pension plans on audit pricing. Using a large sample of U.S. firms for the period 2004-2012, we document that auditors charge higher audit fees for auditing financial statements of clients with DB pension plans, as compared to those without DB pension plans. The documented effect of DB pension plans on audit fees is more pronounced when client earnings are more sensitive to DB pension estimates, or when manager compensation induces more risk taking. Furthermore, we find that the additional audit fees charged for clients sponsoring DB pension plans are negatively associated with the extent of manipulation in the assumed return rates—an important DB pension accounting estimate. Collectively, our results are consistent with the view that auditors charge higher fees to compensate for additional effort when auditing financial statements of clients who sponsor DB pension plans. Further, our findings suggest that auditors consider clients’ incentives to manipulate pension accounting in adjusting their effort and that increased audit effort mitigates pension accounting manipulations.

Our study extends the literature on the effects of corporate pension plans on business decisions. A growing strand of literature examines how pension plans affect sponsoring corporations’ investment and financing decisions (e.g., Rauh 2006; Shivdasani and Stefanescu 2010; Cocco and Volpin 2013; Chaudhry et al. 2017). However, little is known about whether pension plans influence auditors’ decisions. Our study addresses this gap in the literature. Furthermore, our study should be informative for regulators who have recently expressed concerns regarding the auditing of pension accounting. Our results suggest that auditors do consider audit risk in pension accounting and exert more effort in attesting financial statements of clients sponsoring DB pension plans than those without DB pension plans. Furthermore, our findings indicate that increased audit effort curbs manipulations of pension estimates.