Abstract
There are many research literatures on the influencing factors of auditing firms’ audit fees, but their influence on audit fees is rarely studied from geographical factors. This paper studies the relationship among the number of regional accounting firms, whether they are local and audit fees, and uses the 2016 A-share listed companies as a sample to collect the number of accounting firms in the cities where the listed companies are located through the Chinese CPA industry management information system; the CPA determines whether it is a local firm. The empirical results show that the number of regional accounting firms is significantly and positively related to audit fees. The greater the number of firms in the region, the higher the audit fees the company will pay. Moreover, this phenomenon is more prominent in the companies who employ local audits. Further research found that the increase in audit fees in the region is a significant manifestation of the improvement in audit quality.
Highlights
For a long time, the audit fees of accounting firms have been a hot issue in the domestic and international audit market research
This paper studies the relationship among the number of regional accounting firms, whether they are local and audit fees, and uses the 2016 A-share listed companies as a sample to collect the number of accounting firms in the cities where the listed companies are located through the Chinese CPA industry management information system; the CPA determines whether it is a local firm
Through the descriptive statistics of the various observations listed in the table, it can be seen that the annual audit fees of listed companies in 2016 are between 100,000 yuan and 51.58 million yuan, with a large gap, with an average of 1,234,400 yuan
Summary
The audit fees of accounting firms have been a hot issue in the domestic and international audit market research. The empirical results show that the number of regional accounting firms has a significant positive impact on audit fees, and local audits have reinforced this impact. This paper firstly proposes the influencing factors of audit fees from the perspective of the number of accounting firms. On one hand, it enriches the theoretical research on the impact of regional factors on audit fees, and on the other hand, it has guiding significance for the government to regulate the operation of the audit market. The organizational structure of this paper is as follows: first review the literature on the factors affecting the audit fees and find out their merits and deficiencies, propose three hypotheses based on the theoretical knowledge, and construct a model for empirical testing, in addition get further analyzing on the nature of the phenomenon, test the robustness of the model and draw conclusions and recommendations
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