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Auditor Industry Specialization and Pay-Performance Sensitivity of Executive Compensation
Date Issued
2012
Date
2012
Author(s)
Lee, Yuen-Ting
Abstract
This study examines whether firms have higher pay-performance sensitivity of executive compensation when audited by an industry specialist. Using a sample of publicly-traded Taiwanese companies during 2005-2010, this study finds that there is a significantly positive association between auditor industry specialization and pay-sensitivity of accounting performance. The results hold for both firm-level industry specialist and partner-level industry specialist. The findings are consistent with the optimal contracting theory that the board of directors increases the pay-performance sensitivity of executive compensation when the accounting-based measure is of higher quality due to higher auditor industry expertise.
Subjects
Executive Compensation Contract
Pay-Performance Sensitivity
Accounting-Based Performance Measure
Industry Specialization
Audit Quality
Type
thesis
File(s)
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Size
23.27 KB
Format
HTML
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