Research On Audit Fees: Empirical Evidence From Chinese A-Share Market

As the price of audit services, audit fees are the effective signal transferring audit quality. It will be at least three implications from the audit quality: reasonable audit fees to attract and build up a high-quality audit personnel; auditors in the audit process to put the investment of resources to be bound by the audit fees; the charges of fierce competition could undermine auditor independence. Therefore, the in-depth study and regulation of behavior on the audit fees is particularly important. However, our country is late about the research on audit fees, Most are normative research, lacking the experience evidence to support. Although Western research about audit charge is quite thorough, and has yielded the substantial result, but its conclusion not necessarily suits an emerging socialist market economy country. Therefore, this article first comments on the Western literature, and then discovers some factors that influencing audit fees probably based on analyzing the characteristics of Chinese audit market. At last, using 2005 the Shenzhen's A-share listed companies we set up the multiple linear regression models of audit fees and relevant influence factors to study deeply.The results are: the main causes that influence audit fees in the actual Chinese audit market include clients'size, the number of subsidiaries and earnings management for the right of further issue stocks. The auditor of our country has not fully considered the risk while choosing customers. The listed company may be shopping audit opinion. In addition, no comprehensive low price competition behavior exists in initial engagement at present. The four big international accounting companies'audit fee is not more than other local companies in the normal anniversary audit market. Moreover this paper also discovers, the listed company'special ownership of share structure indeed produces negative influence on audit fees in our country. Namely the state owned shares comparatively is higher, more the listed company depresses to audit expenses, but this kind of influence so far still is not very obvious. Aim at above conclusion, this paper puts forward some beneficial suggestions. Our country should gradually build up the market list price as predominant, government direct for assistance of the audit charge. We should strengthen the audit risk consciousness of auditors. Be as soon as possible building up the civil case responsibility as main registration accountant's law responsibility system. Our country should publish more laws to forbid the listed company's behavior of purchasing auditor's opinion. At last, we design a form of audit fees; it should be useful in audit fees'disclosure.