Research On The Impact Of CEO Succession Sources On The Audit Fees Of Listed Companies

With the rapid development of the global economy,companies are facing a changing business environment with increasing risks,and CEOs as business leaders must have multidimensional thinking,extensive management experience,and superb problem-solving skills in order to cope with the rapidly changing environment.Selecting a CEO that matches the needs of the business is critical to its survival and growth.If the CEO is changed,a successor CEO from a different source after the change may have an impact on the business’ s operational risk and agency costs.Operating risk and agency costs are important references for CPAs to use when assessing audit risk to determine audit fees.Reasonable audit fees can improve audit quality to a certain extent,enhance the level of true and reliable financial reports and regulate the development of capital market;they can also reflect the overall corporate risk and remind the audited entity of sustainable and healthy development.Therefore,it is important to study the influence of CEO succession source on audit fees of listed companies.This paper examines the impact of CEO succession sources on audit fees of listed companies,using Chinese A-share listed companies in Shanghai and Shenzhen from 2009-2021 as the research sample and external succession as the entry point.Considering that CEO functional background,CEO-executive team interaction,and corporate performance may influence the business management of the successor CEOs,which in turn affects the behavioral decisions of CPAs,this paper uses CEO functional richness,CEO-executive team member similarity,and prior corporate performance as moderating variables.The mechanism of the effect of external CEO succession on audit fees is also explored.In addition,internal corporate governance affects the relationship between CEO succession sources and audit fees,and this paper examines the differences in the effects under different equity concentration and internal control quality in groups.It is found that(1)CEO external succession significantly increases corporate audit costs;(2)CEO functional richness,similarity between CEO and executive team members,and prior corporate performance weaken the positive relationship between CEO external succession and audit costs;(3)agency costs play a mediating role between CEO external succession and audit costs;(4)the positive relationship between CEO external succession and audit costs relationship is more significant in firms with low equity concentration and low quality of internal control.After researching this paper,we propose that when selecting a CEO,companies should consider the personal characteristics of the external successor and the suitability of the executive team in the context of the organizational environment;reasonably adjust the equity allocation and improve the internal control mechanism to reduce the agency cost of the external successor;and develop appropriate executive incentive policies to bring into play the positive effect of the external successor.As an accounting firm,we should reasonably determine audit fees,enhance professional skills,adhere to professional ethics,uphold professional skepticism and a high sense of professional responsibility,and jointly promote the sound development of the capital market.