Abstract
Following the upper echelons and time orientation theoretical frameworks, this study meticulously examines the effects of managerial myopia on audit fees utilizing data of Chinese A-share listed companies spanning from 2007 to 2022. Employing textual analysis and machine learning techniques on MD&A, we find that managerial myopia can significantly increase audit fees by intensifying financial constraints, diminishing accounting information comparability, and compromising internal control quality. However, this relationship is accentuated by analyst coverage but attenuated by digital transformation. Cross-sectionally, we document a particularly pronounced positive association between managerial myopia and audit fees within firms exhibiting higher corporate risk tolerance, diminished industrial competition and a lower degree of marketization. Collectively, this study further enriches corporate governance and audit fees literature, advancing valuable insights for regulators, accountants and auditors.
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