Does the resignation of an independent director affect audit fees? An empirical study based on Chinese A-share listed companies

Abstract

Based on the data of Chinese A-share listed companies from 2006 to 2020, the article empirically examines the impact of independent directors quitting on audit fees when it occurs in listed companies, using independent directors quitting as an entry point. The empirical results show a significant positive relationship between independent directors quitting and audit fees and the positive effect still holds after controlling for firm fixed effects, instrumental variable method, and variable substitution test. The above effect is the early resignation of independent directors, more significant in listed companies of a nonstate nature, employing nonBig Four accounting firms, and firms where the positions of chairperson and general manager are separated. Furthermore, this study provides empirical evidence for the study of the effect between independent directors' quit and audit fees. The results also have some reference value for listed companies to improve the information disclosure level and how auditors make reasonable pricing.