Research On The Impact Of The Human Capital Characteristics Of Accounting Firms On Audit Fees

Economic development and capital markets need audit services. With the development of China’s economy, the capital markets began to grow stronger, the SCF spent specification efforts on the securities, the Accounting Firm as an independent legal entity, played a supervisory role because of providing a neutral and objective audit services, and it is irreplaceable. In2008, CICPA held conference about promoting our country Accounting Firm to do bigger and stronger, committing to develop and cultivate one hundred or so accounting firm who would have a certain scale, and could provide comprehensive service for large enterprises and enterprise group with5to10years. Audit fees sets up the economic bridge between the audited entity and accounting firms, audit fees how many determines the accounting firm to provide the quality of audit service. Audit service plays a crucial rule in reducing the information asymmetry between investors and management on securities market, why, because it provides reasonable assurance for the relativity and reliability of financial information.The CPA industry belong to the human resource-intensive industries, the human capital is the key. The level of investment in human capital, determines CPA’s professional quality, professional ability and professional ethics level. For certified accounting firms, core resources is human resources, core competence is to provide more quality audit services, CPA play a key role of decision on the quality of audit services. CPA’s age structure and educational structure will affect their ability to practice and professional judgment. So I decided to research An Empirical Study of the Human Capital Characteristics of Accounting Firms impact on Audit Fees.The article theories include Human Capital Theory, Signaling Theory, Asymmetric Information Theory and Principal-Agent Theory. The four hypothesis of this paper as follows:(1) The educational structure of the CPA (the proportion of master (including double degree) and doctor certified) and audit fees are positively related;(2) The proportion of the CPA in all the practitioners and audit fees are positively related;(3) The age structure of the CPA that the proportion of no more than40years of age and audit fees are positively related;(4) The number of leading talent CPA (include back-up candidate) is positively correlated with audit fees.The Model Constructed in the article, as follows:The explanatory variable is audit fees. Explanatory variables include the educational structure of the CPA, the proportion of the CPA in all the practitioners, the age structure of the CPA that the proportion of no more than40years of age and the number of leading talent CPA (include back-up candidate).The empirical results show that the assumption1and assumption3has been confirmed. The higher the proportion of master (including double degree) and doctor certified, the higher audit fees, so does age structure. However, the assumption3has come to the opposite conclusion. The higher the proportion of CPA in all the practitioners, the lower audit fees. It is inconsistent with the theory and practice. The hypothesis4is not confirmed.