CEO pension and auditors’ going-concern opinion

초록

In U.S., CEO pension is common and sizable compensation recorded as off-balance sheet liabilities before CEOs’ retirement. Also, since it becomes unplayable after bankruptcy, CEOs awarded with pension plans are known to manage their firms conservatively to prevent such bankruptcies. Therefore, it was empirically examined how auditors consider CEO pension in determining their going-concern opinions. Our empirical results indicate that auditors are more likely to issue negative going-concern opinions for firms that provide their CEOs with pension plans. The results remain robust after controlling various endogeneity issues. Overall, our findings imply that auditors recognize CEO pensions as liabilities rather than significantly consider how CEO pensions provide incentives for conservative firm management. © 2018, Allied Business Academies. All rights reserved.

키워드