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Audit committee compensation and the demand for monitoring of the financial reporting process*

* This paper has been replicated

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  • Engel, Ellen
  • Hayes, Rachel M.
  • Wang, Xue

Abstract

We examine the relation between audit committee compensation and the demand for monitoring of the financial reporting process. We find that total compensation and cash retainers paid to audit committees are positively correlated with audit fees and the impact of the Sarbanes-Oxley Act, our proxies for the demand for monitoring. Our results are robust to the inclusion of audit committee quality, measured as the committee chair financial expertise. Our results suggest a recent willingness by firms to deviate from the historically prevalent one-size-fits-all approach to director pay in response to increased demands on audit committees and differential director expertise.

Suggested Citation

  • Engel, Ellen & Hayes, Rachel M. & Wang, Xue, 2010. "Audit committee compensation and the demand for monitoring of the financial reporting process," Journal of Accounting and Economics, Elsevier, vol. 49(1-2), pages 136-154, February.
    • Handle: RePEc:eee:jaecon:v:49:y:2010:i:1-2:p:136-154
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    References listed on IDEAS

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    Replication

    This item has been replicated by:
  • Wysocki, Peter, 2010. "Corporate compensation policies and audit fees," Journal of Accounting and Economics, Elsevier, vol. 49(1-2), pages 155-160, February.

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