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- Publisher Website: 10.1016/j.jacceco.2012.05.001
- Scopus: eid_2-s2.0-84872494911
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Article: The effects of firm-initiated clawback provisions on earnings quality and auditor behavior
Title | The effects of firm-initiated clawback provisions on earnings quality and auditor behavior |
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Authors | |
Keywords | Accounting restatements Audit fees Audit risk Clawbacks The Dodd-Frank Act |
Issue Date | 2012 |
Publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jae |
Citation | Journal of Accounting and Economics, 2012, v. 54 n. 2-3, p. 180-196 How to Cite? |
Abstract | While firm-initiated compensation recovery (or clawback) provisions are gaining popularity and the recently enacted Dodd-Frank Act seeks to make the clawback of erroneously awarded compensation mandatory for all listed companies, little is known about their effectiveness. We find that the incidence of accounting restatements declines after firms initiate such provisions. In addition, we show that investors and auditors view such provisions as associated with increased accounting quality and lower audit risk. Specifically, we find that firms' earnings response coefficients increase after the adoption of clawback provisions. Further, for firms that adopt clawbacks, auditors are less likely to report material internal control weaknesses, charge lower audit fees, and issue audit reports with a shorter lag. |
Persistent Identifier | http://hdl.handle.net/10722/165795 |
ISSN | 2023 Impact Factor: 5.4 2023 SCImago Journal Rankings: 8.337 |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Chan, LH | en_HK |
dc.contributor.author | Chen, KCW | en_HK |
dc.contributor.author | Chen, TY | en_HK |
dc.contributor.author | Yu, Y | en_HK |
dc.date.accessioned | 2012-09-20T08:23:58Z | - |
dc.date.available | 2012-09-20T08:23:58Z | - |
dc.date.issued | 2012 | en_HK |
dc.identifier.citation | Journal of Accounting and Economics, 2012, v. 54 n. 2-3, p. 180-196 | en_US |
dc.identifier.issn | 0165-4101 | en_HK |
dc.identifier.uri | http://hdl.handle.net/10722/165795 | - |
dc.description.abstract | While firm-initiated compensation recovery (or clawback) provisions are gaining popularity and the recently enacted Dodd-Frank Act seeks to make the clawback of erroneously awarded compensation mandatory for all listed companies, little is known about their effectiveness. We find that the incidence of accounting restatements declines after firms initiate such provisions. In addition, we show that investors and auditors view such provisions as associated with increased accounting quality and lower audit risk. Specifically, we find that firms' earnings response coefficients increase after the adoption of clawback provisions. Further, for firms that adopt clawbacks, auditors are less likely to report material internal control weaknesses, charge lower audit fees, and issue audit reports with a shorter lag. | en_HK |
dc.language | eng | en_US |
dc.publisher | Elsevier BV. The Journal's web site is located at http://www.elsevier.com/locate/jae | en_HK |
dc.relation.ispartof | Journal of Accounting and Economics | en_HK |
dc.subject | Accounting restatements | en_HK |
dc.subject | Audit fees | en_HK |
dc.subject | Audit risk | en_HK |
dc.subject | Clawbacks | en_HK |
dc.subject | The Dodd-Frank Act | en_HK |
dc.title | The effects of firm-initiated clawback provisions on earnings quality and auditor behavior | en_HK |
dc.type | Article | en_HK |
dc.identifier.email | Chan, LH: lhlchan@hkucc.hku.hk | en_HK |
dc.identifier.authority | Chan, LH=rp01048 | en_HK |
dc.description.nature | link_to_subscribed_fulltext | - |
dc.identifier.doi | 10.1016/j.jacceco.2012.05.001 | en_HK |
dc.identifier.scopus | eid_2-s2.0-84872494911 | en_HK |
dc.identifier.hkuros | 206133 | en_US |
dc.identifier.hkuros | 216388 | - |
dc.identifier.isi | WOS:000312683500007 | - |
dc.publisher.place | Netherlands | en_HK |
dc.identifier.scopusauthorid | Chan, LH=55251664500 | en_HK |
dc.identifier.scopusauthorid | Chen, KCW=36851411200 | en_HK |
dc.identifier.scopusauthorid | Chen, TY=8108503100 | en_HK |
dc.identifier.scopusauthorid | Yu, Y=55252097100 | en_HK |
dc.identifier.citeulike | 10696937 | - |
dc.identifier.issnl | 0165-4101 | - |