CEO Change,Company's Investment Scale And Audit Cost

Auditors are required to make full assessment of risks of the units under auditing with the aim to lower the risk in their own practices.Enterprises may face greater uncertainties due to corporate CEO change,and such uncertainties will arouse wide concern among internal and external stakeholders.External stakeholders prefer to seek high-quality audit services to monitor agents in order to reduce the risks brought by corporate CEO change,although they will spend more money on audit services.When providing audit services,auditors will fully assess the risks caused by corporate CEO change and strengthen auditing efforts and audit coverage to reduce the undiscovered risk of material misstatements.While greater workload and risks in audit practices will cause the increase in audit expenses.This thesis takes the company listed on A-share mainboard from 2007 to 2016 as a statistical sample,and the empirical test examines the effect of corporate CEO change on audit fees and makes the following conclusions:corporate CEO change will increase audit expenses of enterprises and make it more possible for auditors to present non-standard and unqualified opinions.It may cause greater uncertainty and unstable operation policy and strategic direction,and auditors will concern changes within the enterprise and may need to adjust audit strategies(such as increasing audit process and expanding audit coverage)so as to cope with risks,increase audit fees and raise the possibility of issuing non-standard opinions.Then,the more times in corporate CEO change,the higher audit fees are required and the more likely the auditors will issue non-standard opinions.The multiple corporate CEO changes may pose great operation risks to enterprises.Moreover,the internal succession of CEO may reduce the audit fees brought by corporate CEO change,in the meantime,the external succession of CEO will increase the audit fees caused by corporate CEO change.The impact of internal succession of CEO on audit fees is more notable than that of the external succession.Compared to the internal succession of CEO,the external succession is more likely to cause the instability in enterprise operation policy resulting in the more significant impact on audit fees.Finally,this thesis finds that corporate CEO change will expand company's investment scale which may lead to the increase in audit expenses.Accordingly,it concludes the empirical evidence that how corporate CEO change affects the audit fees.