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How Auditors Respond to Resignations of Supervisory Board Members

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  • Xinming Liu
  • Xiaoqiao Zhu

Abstract

Using manually verified supervisory board (hereafter, SB) resignation data from China spanning the period 2009–2020, our study finds a positive relationship between audit fees and SB resignations. Additionally, the positive relationship between audit fees and SB resignations is amplified when resignations signal a heightened level of monitoring risk, as reflected in the characteristics of the resigning SB members, the successors and the firm. Mechanism analysis supports the Risk Signal Mechanism, highlighting the role of SB members in monitoring and accessing risk‐related information prior to resignations. Lastly, auditors are less likely to issue clean audit opinions following SB resignations.

Suggested Citation

  • Xinming Liu & Xiaoqiao Zhu, 2025. "How Auditors Respond to Resignations of Supervisory Board Members," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 65(4), pages 3310-3346, December.
    • Handle: RePEc:bla:acctfi:v:65:y:2025:i:4:p:3310-3346
    DOI: 10.1111/acfi.70041
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    References listed on IDEAS

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