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Association between executives’ foreign background and audit fees

Author

Listed:
  • Wunhong Su
  • Chen Yin

Abstract

Purpose - This study aims to investigate the association between executives with foreign backgrounds and the audit fees paid by the Chinese-listed firms over the period from 2010 to 2020. Design/methodology/approach - To examine the association between executives’ foreign experience and audit fees, this study constructs the following empirical model:Lnfeei,t= β0+ β1Foreign backgroundi,t+ ∑βjControli,t+ YearFE + IndFE + εi,t(1). Findings - This study finds that auditors charge higher fees for firms hiring more executives with foreign backgrounds. The results are robust to a battery of robustness checks, including fixed effects, alternative measures of independent variable, controlling for other characteristics of executives and auditors and entropy balancing method. Originality/value - This study sheds light on how executives’ foreign backgrounds affect audit fees, enriching the literature on executive heterogeneity and audit fees and providing important implications for audit practitioners.

Suggested Citation

  • Wunhong Su & Chen Yin, 2023. "Association between executives’ foreign background and audit fees," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 23(2), pages 186-204, December.
    • Handle: RePEc:eme:rafpps:raf-12-2022-0330
    DOI: 10.1108/RAF-12-2022-0330
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    More about this item

    Keywords

    Foreign background; Audit fee; Audit risk; Auditor effort; Outward foreign direct investment; G32; M12; M42;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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