The Empirical Study On Determinants Of The Ratios Of Audit Fee To Asset Of Listed Companies

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. The price of audit service fees is affected by not only demand and supply but also characteristic of audit market.Until now, there are a large number of empirical studies on determinants of audit fee. But these studies are mostly about the general factors of audit fee and few are about the factors of ratios of audit fee to asset{ROF}. Based on obtaining 1341 samples from listed companies in 2008, 2009 and 2010 year, and using the regression's method and the ratios of audit fee to asset model, this paper analyzes the impact of characteristics on ROF and whether each determinant has the consistent relationship with ROF during the three years. The research finds ROF is significantly negatively associated with the size of asset of listed companies; ROF is negatively associated with the liquid ratio and the ratios of asset to the liability of long term, but whether the influence is obvious or not needs to be verified; ROF is positively associated with the ratios of the accounts receivable to total assets and ROE, but whether the influence is obvious or not needs to be verified; whether the relationship between the ratios of the inventory to total assets and ROF is positive or not needs to be verified, and whether the influence is obvious or not needs to be verified. Before the analysis of the impact of characteristics on ROF by comparing the regression's results of the audit fee model and the ratios of audit fee to asset model, it validates that the determinants of ROF are the same as that of audit fee, the explanatory power of the ratios of audit fee to asset model is higher than that of the audit fee model far away. It validates the feasibility of investigating determinants from the angle of ROF.The research on ROF is only a means and its purpose is to prescribe the standards and disclosure of audit fees of listed companies in China, which assists the public to judge the financial condition of listed company by disclosing the relevant information about audit fees of listed company. In this way, the public investors' interest will be protected sufficiently, and the resources of the capital market will be allocated appropriately.