Earnings Quality,Cash Dividends And Audit Fees

Audit fees are fees that the certified public accountant provides to the audited unit for the audit services to cover the costs that the certified public accountant pays in the audit process.The level of audit pricing is not only related to the audit investment of the CPA,but also affects the audit quality.Following risk-oriented auditing and earnings quality are important basis for CPAs to assess the risks of material misstatement of audited entities,and the impact on audit fees cannot be ignored.At the same time,cash dividends provide incremental information on the quality of the audited unit's earnings based on its signaling function.Therefore,this paper conducts research on the impact of earnings quality and cash dividends on audit fees.The paper sorts out relevant literature on earnings quality,cash dividends and audit fees.Based on basic theory,this paper divides earnings quality into two dimensions,earnings persistence and earnings manipulation risk,and studies the relationship between earnings quality and audit fees,as well as the moderating effect of the relationship between earnings quality and audit fees.Based on this,a theoretical analysis is performed and research hypotheses are proposed.This paper uses data from Shenzhen-listed companies from 2014 to 2018 for descriptive statistical analysis,correlation analysis,multicollinearity test,multiple regression analysis,and robustness test.Based on the research conclusions,relevant suggestions are put forward.The empirical results show that:(1)there is a significant negative correlation between the persistence of earnings and audit fees,which indicates that the higher the persistence of earnings,the lower the audit fees;(2)There is a significant positive correlation between earnings risk and audit fees,indicating that the higher the risk of earnings manipulation,the higher the audit fees;(3)Other conditions are the same.Compared with customers who have not paid cash dividends,Paying cash dividends enhances the negative correlation between earnings persistence and audit costs;(4)Other conditions are the same.Compared with customers who have not paid cash dividends,cash dividend payments suppress the positive correlation between earnings manipulation risks and audit costs.Therefore,cash dividends have a signal transmission function,which transmits positive signals on the quality of the audited unit's earnings,reduces the level of audit risk assessed by certified public accountants,and reduces audit investment.Under the same conditions,the fees charged by CPAs to customers who pay cash dividends are lower than those to customers who do not pay cash dividends.Cash dividends have a moderating effect on the impact of earnings sustainability and earnings manipulation risks on audit fees.The significance of this paper is that,based on the signaling function of cash dividends,it has verified that cash dividends can provide incremental information on earnings quality,help certified accountants reasonably avoid audit risks,improve audit quality,and enrich the research on the factors affecting audit fees.