The Study On Determinants Of Audit Fees For Chinese A-share Listed Companies

Until now, there are large numbers of empirical studies on determinants of audit fees. But these studies mostly are about some general factors and a few are based on the angle of corporate governance. As more attention on corporate governance is paid, more scholars treat corporate governance as an important determinant on audit fees.Based on audit fee theory and corporate governance theroy, and using A-share listed companies disclosed audit fees of annual financial reports in 2007,2008,2009 year as a sample, the paper analyzes the impact of the complexity of the economic business, the audit risk and corporate governance structure on the ratios of audit fee to asset (ROF) through audit fee model and ROF model. Through the comparison of the regression results of the two models, we can see the significant determinants of ROF is the same as that of audit fees, and the explanatory power of ROF model is far higher than that of audit fee model. Consequently, we validate the feasibility of investigating determinants from the angle of ROF. At the same time, our research finds the relationship of each determinants and ROF. ROF is significantly positively related to accounts receivable and inventory to total assets ratio, debt to asset ratio, non-standard audit opinion and board meeting frequency, while it is significantly negatively related to current ratio, the total of the three biggest shareholders' shareholding ratio, the proportion of state-owned shares, the proportion of tradable shares and executives layer holdings. However, pluralism of board chairman and CEO and the settings of audit committee do not have significant influence on ROF. In the end, this paper put forward relevant policy suggestions according to audit fees status.