Geographic Distance Of Major Customers And Audit Fees

Audit fees have always been a topic of concern in the field of accounting research at home and abroad.As far as the existing literature is concerned,the research on audit fees is mostly concentrated on the characteristics of the firm and the characteristics of the audited entities.In recent years,as the supply chain has become the focus of attention,customer characteristics have gradually been taken into account in the scope of factors affecting audit fees.There is a considerable amount of literature research about the concentration of customer,and there are few studies on other customer characteristics.This paper selects the geographical distance between the customer and the company as a customer feature for research.The cultural characteristics and development levels of different regions in China are different.At the same time,the rapid development of high-speed rail also promotes the development of industrial economy.Therefore,this paper introduces geographical location factors into the field of audit fees,and explores what impact the distance between main customers and the company would have on the audit fees.Earlier studies indicated that the two key factors affecting audit fees are auditor efforts and litigation risks.This paper uses the data of the top five customers disclosed by the Shanghai-Shenzhen A-share listed companies in 2009-2016 to analyze the information asymmetry of long-distance customer affects these two key factors to explore the impact on audit costs.The study found that:(1)The farther the listed company is from the main customers,the higher the audit fee,and vice versa.(2)The increase in the geographical distance of the company's major customers leads to an increase in audit costs,which is mainly reflected in the increase in the risk premium;(3)Under different levels of customer concentration,the availability of high-speed rail,and the nature of different property rights,the geographical distance of major customers has different effects on audit costs.This article provides evidence that customer geographic characteristics have effects on audit costs,enriches research in the fields of geographic economics,supply chain,and audit.