The Determinants Of Audit Fees

Independent audit has been playing a more and more important role in current capital market. Its essential role is as follows: to ensure capital market's function of resource distribution in gear, to safeguard the stability of the capital market, and even the stability of the whole social economy. However, whether independent audit can play above-mentioned roles depend on audit quality. As a signature, audit fees can influence audit quality from three aspects at least. Firstly, rational audit fees help to attract and concentrate high-quality auditing talents. Secondly, the resource that auditor input in the course of audit will be constrained by audit fees. Thirdly, the drastic competition of audit market may damage auditor's independent character. Now, there is a furious competition in our country' securities audit market. Some audit firms do not hesitate to accept the business at low price and injure audit quality seriously. It is urgent to study the state of audit fees behavior and support supervision measure of the supervision department. Based on the western documents, this paper study the determinants of audit fee in Chinese A stock market, utilizing the annual report that has already revealed audit fees. At last this paper also puts forward some suggestion for normalization of audit fees behavior.After collecting the audit fees data of 343 sample companies from 2001 annual report, we set up the multiple linear regression model of audit fees and relevant influence factor. We also make a further research on the influence of audit opinion, the influence of audit firm's scale, and the influence of low-balling behavior. The result is follows. In our country's security audit market, the audit fees determinants include the scale of auditee's assets, the subsidiary counts involved in amalgamate report, non-standard unqualified opinion, interim audit, and the list company's location. The auditor of our country has not fully considered the risk while choosing the customer. But there will be a discount to high-quality auditees. Besides these, the listed company may be shopping audit opinion. And differential effect of audit firms has not take shape yet. There is a drastic competition between Big-10 and non-Big-10 no matter in big auditees market or little auditees market. In addition that, no comprehensive low price competition behavior exist in initial engagement at present. The audit fees of annual report audit are not reason for auditor's alteration.