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    Credit risk assessment and executives’ legal expertise
    (Springer Science+Business Media, LLC, 2023-12) Pham MH; Merkoulova Y; Veld C
    We study whether firms that are led by chief executive officers (CEOs) with law degrees (lawyer CEOs) have different credit ratings and costs of debt from other firms. Our sample consists of Standard & Poor’s 1500 firms from 1992 to 2020, 9.2% of which have lawyer CEOs. We find that these firms have better credit ratings, compared to other firms. On average, their cost of debt is 10% lower than that of firms led by CEOs without legal backgrounds. Our results are robust to different specifications, sampling methods, and controls, such as firm and CEO characteristics. We identify two ways that CEO expertise translates into higher credit ratings: lawyer CEOs are associated with a lower future volatility of stock returns and a reduction in information risk. The decreased business risk and better financial reporting are associated with 5% lower auditing fees for firms with lawyer CEOs.
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    Audit pricing in the pension plan audit market : an empirical study on the New Zealand KiwiSaver characteristics, audit market factors, non-audit services and board governance : a 110.899 thesis presented in partial fulfilment of the requirements for the degree of Master of Business Studies in Accountancy at Massey University, Albany, New Zealand
    (Massey University, 2014) Moeakiola, Saia Uai Havili
    This thesis documents the influence of the New Zealand KiwiSaver characteristics, audit market factors, non-audit services and board characteristics on audit fees between 2011 and 2013 fiscal years. It documents the first audit pricing study on New Zealand’s defined contribution pension plan, the ‘KiwiSaver’, which adds to the little literature in the pension industry. I find that the KiwiSaver characteristics, including size, risk and complexity, are associated with audit fees, consistent with prior pension plans research and other markets studied. Further, I examine whether audit market factors (measured by Big Four and first year audit) earn audit fee premiums in the industry. Consistent with prior pension plans research I find that the audit market factors have no effect on audit fees in the industry, despite the Big Four firms having a much higher share in the KiwiSaver audit market. I also investigate the impact of the auditor-client relationship on audit pricing and address the KiwiSaver regulators concern with auditor independence in the industry. I find that a non-audit services fee is not a significant factor in determination of audit fees in the industry. This suggests that auditor independence is not an issue. The KiwiSaver presents a multi-tiered agency setting in which the impact of governance practices on audit fees can be analysed. I find evidence that skilful and expert trustees demand higher audit quality services, despite KiwiSaver’s smaller board size. Key words: Audit pricing, pension plan, KiwiSaver, audit market factors, non-audit services and governance.