Audit Firms' Overall Human Capital Characteristics And Audit Fees

Human capital is the most important resource of accounting firms.It is also the key input factor in the production process of auditing services.The audit fee is the return of audited clients to accounting firms,and the firm's subsequent investment in human capital will also be significantly affected by the audit fees.Therefore,whether the accounting firm's investment in human capital will affect and how it affects audit fees is a matter of concern.The research on the auditor's human capital characteristics can be carried out at the individual level,the project team(signed accountant team)level and the overall level of the firm,while the existing related research is concentrated in the first two levels.According to the above discussion,this paper relied on audit pricing theory and human capital theory,mainly does some research in the impact of the overall human capital characteristics of accounting firms on audit fees.This article collected all the relevant information of the CPAs of 40 accounting firms with securities and futures-related business licenses from the website of the Chinese Institute of Certified Public Accountants.The various data of listed companies are from the CSMAR database.The preliminary analysis shows that there are significant differences in the characteristics of human capital such as age,duration of practice,education,and other comprehensive qualifications of CPAs in different accounting firms.From the perspective of the human capital utilization at the firm level,the results show that the audit firms which have the CPA with the higher capacity radiance,the higher level of education,and the stronger relevant professional knowledge reserves can charge higher audit fees,but CPA's work experience measured by age and the practice time is significantly negatively correlated with audit fees.In addition,this paper explores whether those impacts vary in the markets of different clients' size,different clients' property and different marketization degree.The Baron& Kenny test shows that audit quality plays a role of “partial intermediary” in the impact of accounting firm's human capital characteristics on audit fees.This paper enriches the research content of audit pricing theory and human capital theory and also provides an empirical basis for the cultivation and development of CPA in China.