Does The Distance Between Auditors And Csrc Affect Audit Fees?

The existing researches on the influence of geographical distance between MIndex entities in the field of accounting and finance mainly focus on the analysis of the influence of geographical distance between listed companies and other MIndex entities.At present,the research on the effect of geographical distance between auditors and CSRC is still a blank in China.Based on geographical heterogeneity,we explore the influence of the geographical distance between CSRC and auditors on audit fees.We use the sample of listed companies in Shanghai and Shenzhen Stock Exchange from 2011 to 2017 to make an empirical study.Firstly,the results show that the closer the auditor is to the CSRC,the higher the level of regulatory risk that the auditor perceives,and then a higher risk premium will be charged to compensate for the related risk,thereby increasing audit fees.Secondly,compared with other audit firm,the auditors from Big4 and big8 audit firms have stronger reputation mechanism,and auditors who are closer to the CSRC will charge higher audit fees.Finally,the influence of geographical distance on audit fees doesn't exist when the audit opinion is modified,while it exists when the audit opinion is not modified.The findings enrich and develop the research of geo-economics and audit fees.It also shows that geographical distance will affect the effect of CSRC supervision.CSRC should strengthen the supervision enforcement,and focus on the blind spots in the geographical distribution of supervision,expand the scope of supervision efforts,strengthen the supervision and guidance of remote audit firms,and adopt regular arrangements such as on-site inspection and ex post supervision,along with special inspection to improve the efficiency of detecting auditing illegal clues.