Research On The Impact Of Environmental Uncertainty On Audit Fees

From the point of view of economics, the audit service is essentially a commodity, the buyer and seller are accounting firms audit clients and audit costs is the price of this commodity. The price is determined by buyers and sellers of audit services in accordance with supply and demand audit service of the decision, which reflects the value of the commodity audit services, the audit is an important economic ties between the accounting firm and the client, but also an important part of the audit market. Audit services to determine the standard price is reasonable or not, will directly affect the independence of the audit, thereby affecting the quality of financial reporting audit will eventually affect the vital interests of the many benefits of capital market stakeholders. Therefore, the relevant audit fee pricing research is very important and it has practical significance, it has become a hot topic of academic concern. Among them, Simunic (1980) study of the audit costs of the most classic-, as a basis for other scholars also conducted extensive audit costs and in-depth study, the formation of a large number of documents. These documents mainly from the elements involved in the audit market research on audit fees, that is, the audited entity, accounting firms and external environment research for the study. Although a lot of research prior to the audit fee pricing many valuable studies, but these studies little regard to the environmental impact of uncertainty on the audit costs.Environmental uncertainty is a concept to explain the operation of the organization’s environmental characteristics, it is due to lack of information, individuals can not accurately predict the changes in the external environment of the organization as well as the impact of the changes have on the organization, reflecting the extent of the unknown and turbulent business environment. The change of the external environment is naturally random and not easily predicted. Environmental uncertainty increases the difficulty of overseeing the company, the company provided earnings management, and even the opportunity to fraud, which allows greater audit risk inherent auditors face; on the other hand, in an uncertain environment, the company to achieve earnings target more difficult, thereby increasing the tendency of earnings management, which will increase the auditor’s audit workload and improve audit fees. Scholars in the study of the nature of the relationship between ownership and audit fees, it has been found that state-controlled enterprises audit fees relative to non-state-owned holding enterprises lower, considering the external environment, which combined with the nature of the property, whether state-controlled nature of property rights can to help companies reduce the environmental uncertainty on audit costs?Firstly, the research results by domestic and foreign literature, based on signaling theory, the theory of reputation mechanism, deep pocket theory put forward by qualitative analysis of environmental uncertainty and audit fees positive correlation assumptions, and then combined with further analysis of the nature of property derived abroad equity has decreased positive correlation between environmental uncertainty and audit fees, and then select from 2010 to 2014 Shenzhen and Shanghai A shares of all listed companies in the study sample, the binding nature of the business property to investigate the influence of environmental uncertainty on audit fees. After the paper selected sample OLS(Ordinary Least Square) regression found that environmental uncertainty, the higher corporate audit costs. The study also found that the state-owned shares to reduce the positive relationship between environmental uncertainty and audit fees, illustrates the nature of property rights of state-controlled companies can help reduce the environmental impact of uncertainty on audit fees. This paper verified enhance capacity to respond to the external environment for enterprises to reduce audit costs have a positive effect, with previous literature mainly from the business, strategy development, business performance and other aspects of the study of the impact of environmental uncertainty, this paper, from the perspective of the audit costs environmental uncertainty on companies, enrich the research in related fields.