Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Is Compensating Audit Committee Members with Stock Options Associated with the Likelihood of Internal Control Weaknesses?

Is Compensating Audit Committee Members with Stock Options Associated with the Likelihood of... We examine whether firms with a stock option plan for their audit committee members are more likely to have internal control weaknesses. Using a sample of 486 US firms, we find that firms with a stock option plan for their audit committee members are significantly more likely to report an internal control weakness than firms without such a stock option compensation plan. Our results support a UK government report which indicates that compensating outside directors with stock options may diminish the effectiveness of these directors. Our findings suggest that stock option compensation plans may adversely affect the functioning of a firm's audit committee. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Auditing Wiley

Is Compensating Audit Committee Members with Stock Options Associated with the Likelihood of Internal Control Weaknesses?

Loading next page...
 
/lp/wiley/is-compensating-audit-committee-members-with-stock-options-associated-IRyEFwjHeS

References (46)

Publisher
Wiley
Copyright
© 2010 Blackwell Publishing Ltd
ISSN
1090-6738
eISSN
1099-1123
DOI
10.1111/j.1099-1123.2010.00416.x
Publisher site
See Article on Publisher Site

Abstract

We examine whether firms with a stock option plan for their audit committee members are more likely to have internal control weaknesses. Using a sample of 486 US firms, we find that firms with a stock option plan for their audit committee members are significantly more likely to report an internal control weakness than firms without such a stock option compensation plan. Our results support a UK government report which indicates that compensating outside directors with stock options may diminish the effectiveness of these directors. Our findings suggest that stock option compensation plans may adversely affect the functioning of a firm's audit committee.

Journal

International Journal of AuditingWiley

Published: Nov 1, 2010

There are no references for this article.