Author(s): Kyung Jin Park, Kyoungwon Mo, Nayoung Yoon
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 examine d how auditors consider CEO pension in determining their going - concern opinions. O ur empirical results indicate that auditors are more likely to issue nega tive going - concern opinions for firms that provide their CEOs with pension plans. The results remain robust after controlling various endogeneity issues. Overall, our findings impl y that auditors recognize CEO pensions as liabilities rather than significan tly consider how CEO pensions provide incentives for conservative firm management .