JOURNAL ARTICLE

Auditing the Derivative Usage of Bank-Holding Companies.

  • Published In: Accounting Horizons, 2023, v. 37, n. 4. P. 67 1 of 3

  • Database: Business Source Ultimate 2 of 3

  • Authored By: Hairston, Stephanie; Johnston, Joseph A.; Zhang, Joseph H. 3 of 3

Abstract

SYNOPSIS: Auditing financial derivatives is complex and contentious. Our study examines the impact of derivative use on the risk premium charged by auditors of bank-holding companies (BHCs). We find that audit fees are higher regardless of whether derivative instruments are used for hedging and trading. This implies that auditors charge BHCs that use derivatives a risk premium to compensate for additional risk related to these instruments. We also find that trading derivatives tend to have a higher risk premium than hedging derivatives. Our results suggest that auditors price risks related to derivatives, and trading derivatives are perceived to be higher risk than hedging derivatives. Data Availability: All data are available from public databases identified in the paper. JEL Classifications: G21; M40; M41. [ABSTRACT FROM AUTHOR]

Additional Information

  • Source:Accounting Horizons. 2023/12, Vol. 37, Issue 4, p67
  • Document Type:Article
  • Subject Area:Business and Management
  • Publication Date:2023
  • ISSN:0888-7993
  • DOI:10.2308/HORIZONS-2020-197
  • Accession Number:173965612
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