A study on the impact of the threat of exit from non-controlling shareholders on audit fees

Abstract

Taking all A-share listed companies from 2010 to 2021 as a sample, this paper examines the impact of the withdrawal threat of non-controlling shareholders on audit fees. The results demonstrate a considerable reduction in audit fees in the event of an exit threat by a non-controlling shareholder. Further analysis shows that the impact of the withdrawal threat on audit fees is particularly obvious in non-state-owned enterprises and enterprises with a high degree of marketization. Mechanism test reveals that the threat of exit can reduce the risk of stock price crash, inhibit surplus management, and thus reduce audit fees. This paper provides new ideas and empirical support for the role of non-controlling shareholders in corporate governance structure.