Reprint of: Rank-and-file employee stock options and audit pricing: Evidence from S&P 1500 firms

Xiaoqi Chen, Maoliang Li, Emmanuel Obiri-Yeboah and Qiang Wu

The British Accounting Review, 2025, vol. 57, issue 1

Abstract: In this study, we examine the impact of rank-and-file employee stock options on audit fees. We document compelling evidence that option grants to rank-and-file employees are positively related to audit fees. Further analyses show that this positive relation is more pronounced when a firm's real earnings manipulation risk is higher and when rank-and-file employees are more sensitive to monetary incentives. We also find that options granted to rank-and-file employees are positively related to audit efforts. The evidence suggests that auditors perceive options to rank-and-file employees to be associated with increased audit risk.

Keywords: Rank-and-file employee stock options; Earnings manipulation; Audit fees; Audit risk; Audit effort (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:57:y:2025:i:1:s089083892500006x

DOI: 10.1016/j.bar.2025.101556

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