مقاله انگلیسی رایگان در مورد تایید خارجی اطلاعات حسابداری و معاملات دارایی غیرمستقیم – SSRN 2018

Intangible asset transactions have grown dramatically in volume and complexity, largely driven by technology licensing agreements (TLA) (e.g., Grindley and Teece, 1997; Gu and Lev, 2001; Arora et al., 2001). TLAs are contracts in which the licensor (i.e., the owner of intellectual property (IP) assets) grants the licensee the right to incorporate its IP into products or services. Approximately 90% of TLAs include accounting-based royalties instead of pure fixed payments (Bessy et al. 2002). The benefits of these royalty arrangements include alleviating adverse selection, moral hazard, and inefficient risk sharing between the contracting parties (e.g., Stiglitz 1974; Allen and Lueck 1993; Bhattacharyya and Lafontaine 1995). While accounting-based royalties mitigate many of these contractual hazards, their reliance on disaggregated accounting information (e.g., product-level sales) induces the risk of misreporting between the contracting parties. In particular, the royalty holder is exposed to weaknesses in its counterparty’s reporting process, as well as the risk of opportunistic reporting. As a result, the royalty holder needs a means to enforce the accuracy of contracted accounting proxies—an aspect largely overlooked in the economics literature.1 This paper addresses this gap by examining the contractual audit terms included in a handcollected sample of technology licensing agreements that base royalties on product-line revenues. TLAs are a useful setting to examine how the licensor’s misreporting risk affects the design of the contractual audit terms for several reasons. First, these agreements are economically significant; the worldwide incomes from TLAs are US$310 billion in 2013 alone, and their growth has outpaced the growth of worldwide GDP (World Trade Organization 2014). Second, contracting parties bilaterally negotiate and voluntarily incorporate audit terms in these contracts, leading to wide variations across contracts. Third, and most importantly, contractual audit terms are ubiquitous elements of these contracts. Financial audits do not eliminate the need for contractual audits because royalty reports require a level of detailed information that is much finer than that included in the audited financial statements. However, there is limited research on the characteristics of contractual audit terms, which are necessary enforcement clauses for these accounting-based royalties. This study contributes to our understanding of how contractual audit terms are used to mitigate misreporting problems not only in TLAs, but also in other contracts that rely on disaggregated accounting information. I investigate two main dimensions of contractual audit terms in TLAs: (1) the scope of the licensor’s audit rights, and (2) the penalties for negative audit results. First, the audit clauses can limit the scope of the royalty audit to certain prior periods (i.e., how far back the licensor may audit) and/or restrict the number of audits performed on the licensee. Second, the licensor may penalize the licensee by shifting the burden of audit fees to the licensee upon detecting a substantial error, and/or imposing interest penalties on underpaid prior royalties. In addition to these explicit penalty terms, an implicit penalty is early termination of the contract following a material breach, including willful underreporting. These explicit and implicit penalties can have deterrence effects by making misreporting more costly to the licensee.