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Strategic Alignment Between Supply Chain Partners and Supplier Audit Fees

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  • Hsihui Chang
  • Rong‐Ruey Duh
  • W. Robert Knechel
  • Sheng Liu

Abstract

This study examines whether strategic alignment between participants in the same supply chain is associated with supplier audit fees. We hypothesize that strategic alignment between suppliers and customers can mitigate the business and audit risk associated with auditing a supplier firm, which will be associated with lower audit fees. We utilize disclosures about major customers to construct a dataset of supplier–customer dyads and then compare the relative strategies of the two parties. The empirical results support our hypothesis that strategic alignment between suppliers and their major customers is associated with lower audit fees for the supplier. We also find that the negative association between strategic alignment and supplier audit fees is more pronounced when auditors are industry specialists. Our results remain robust when using alternative measures of strategic alignment, testing for functional form misspecification, and addressing potential endogeneity.

Suggested Citation

  • Hsihui Chang & Rong‐Ruey Duh & W. Robert Knechel & Sheng Liu, 2026. "Strategic Alignment Between Supply Chain Partners and Supplier Audit Fees," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 53(1), pages 107-130, February.
    • Handle: RePEc:bla:jbfnac:v:53:y:2026:i:1:p:107-130
    DOI: 10.1111/jbfa.70011
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    References listed on IDEAS

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    Cited by:

    1. Xianhang Qian & Le Zhang & Kunzhu Zhao, 2026. "Common Suppliers and Stock Return co‐Movement: Evidence From China," International Review of Finance, International Review of Finance Ltd., vol. 26(2), June.

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