The Effect Of Earnings Management On Audit Fees

Audit is an important link in the tripartite relationship with the commissioning party and the audited entity.The audit fees not only affect the quality of the audit work itself,but also affect the economic behavior of the relevant information demand party based on the audit result information.Although new business forms are constantly emerging in the firm's industry,the sources of income are increasingly widespread.However,the audit business' s revenue still occupies a significant proportion of the firm's total revenue.According to the research of relevant scholars at home and abroad,there are already more than 100 factors that have proved to have a greater impact on the audit fees.As the research deepens,many scholars begin to compare audit fees with certain characteristics or behaviors of client companies.With the development of risk-oriented auditing,some scholars have begun to focus on the study of an important potential factor affecting audit costs,namely earnings management.The management of the company manages earnings in order to achieve qualifications for allocating shares,listing IPOs,and avoiding delisting.All kinds of actions will complicate accounting activities and economic operations,increase the difficulty of auditing,increase auditing risks,and consume more auditing resources.This is reflected in audit fees.This article combines the analysis of client company's earnings management and firm's audit fees to explore its causality.First of all,on the basis of understanding the relevant theoretical concepts,we reviewed the previous relevant domestic and foreign literatures,and reviewed the literature on the basis of learning and research.Second,in-depth analysis of how earnings management affects audit fees,and further consider the intrinsic reasons that affect the correlation between audit fees and earnings management,and put forward relevant assumptions on this basis.Third,by constructing measurement indicators and models,selecting samples and conducting multiple regression analysis,the empirical results show that audit fees and earnings management are positively related.At the same time,in order to explore whether there is a problem ofaudit independence in such a relationship,a factor of the type of audit opinion is introduced on the basis of model 1,and a multiple regression analysis is performed.According to the empirical results of the two models,this paper argues that there is a positive correlation between earnings management and audit fees,and it is more because of the increase in audit procedures and time and the improvement of audit quality,not because of the purchase of audit opinions.Finally,this paper proposes to improve corporate governance to standardize earnings management,improve audit fees and disclosure systems,and standardize audit fees.