The Study On The Determinants Of Audit Fees: A Quantile Regression Approach

Over these years, the growing market economic development highlighted the status of independent audit in the capital market. Auditing, which is a supervising tool for investors, not only provides decision support for investors’ financing, but also plays an important role in the protection of the resource allocation and the preservation of the stability of the social economic development, and so on.Due to the continual failures in auditing at home and abroad in recent years, the Securities Regulatory Commission, the Institute of Certified Public Accountants and the social public have improved the requirements of the content and quality of auditing information disclosure of listed companies. In this context, stakeholders become to pay more attention to the audit quqlity. Audit fee, which is charged by a firm providing audit service and is an effective basis of assessing audit quality, reflects the equilibrium of supply and demand relationship between listed companies and firms to a certain extent. So the research on audit fee is necessary.There are a lot of literature research about influencing factors of audit fee, most of which are limited to using ordinary least squares regression. Using the least squares regression can only examine the influence of different factors on audit fee in the average degree. Given this, the paper makes a further research by introducing the method of quantile regression.Focusing on the 2010-2012 China’s listed companies of Shanghai and Shenzhen, the paper firstly makes empirical test to the influence factors of audit fees using panel data in a least-square method. Study finds that there is no difference between the influence of various factors on the audit fee and the previous study. Then, the paper analyzes the regression results at different audit fee level by using quantile regression, which shows that the firm size and accounting firm size are significantly positively related to audit fee in different quantiles, and the positive influence is increasing with the level of audit fee; and that the audit risk is significantly positively related to audit fee in different quantiles, and the positive influence shows a trend of inverted "U". Profitability, the degree of earnings management, audit opinion type and the change of accounting firm have different influence on audit fee because of the different level of audit fee. Overall, the above results can’t reflect if we analyze using the least squares regression.