Font Size: a A A

An Empirical Study Of The Determinants Of Audit Fees

Posted on:2004-02-02Degree:MasterType:Thesis
Country:ChinaCandidate:J Z YeFull Text:PDF
GTID:2156360095956754Subject:Accounting
Abstract/Summary:PDF Full Text Request
The main purpose of this paper is to research on audit fees in China audit market. Till now, studies on audit fees in China audit market are rarely few and all are normative research. Thus, we attempt to investigate the determinants of audit fees of the Chinese publicly held companies by empirical research. In the paper firstly we review the relevant literature for the design of the study, then develop our hypotheses, lastly multiple linear regression is employed to empirically analyze a sample comprised of 742 publicly held companies. The major empirical results are summarized below:Firstly, the auditor brand-name reputation is significantly influencing audit fees in China audit market. Whatever we classify the auditor firm as "big10" and "non-big10 or "big5" and "non-big5", we all find that the coefficient on the variables capturing the auditor firm size, big10 (big5), is positive and highly significant. Because the TianJian Accounting firm size is the biggest of the big5, we further to classify "big5" as "TianJian" and "big4". We also find that the coefficient on the variable capturing the auditor firm size, Auditor-tian and big4, is positive and highly significant, and the coefficient of the Auditor-tianis bigger than the big4.Secondly, the determinants of audit fees in China audit market are client size; the number of subsidiaries; account receivables/total assets and the location of accounting firm. The client size is the most important factor of the determinants of audit fees. But the auditee risk isn't significantly influencing audit fees. We find that the coefficient on the variables capturing the auditee risk except for "lem" is insignificant.Thirdly, the China evidence finds that audit fee discounting happen not on the initial engagement but on the auditee and the auditor in the different region.
Keywords/Search Tags:Audit fee, Brand-name reputation, Low balling, Auditee size, Empirical research
PDF Full Text Request
Related items