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The impact of ultimate ownerships on audit fees: evidence from Chinese listed companies

Author

Listed:
  • Nan Hu
  • Fangjun Wang
  • Peng Wang
  • Lee Yao
  • Junrui Zhang

Abstract

This paper investigates the relationships between ultimate ownerships and audit fees (ADFEE). Using the data of 1428 Chinese listed companies in 2008, our empirical results show ADFEE are lowest for companies controlled by central government, followed by companies controlled by local government. In addition, we reveal that the longer the control chain from the listed company to its ultimate owner, the higher the ADFEE that company will pay. We also find that there is a negative relationship between the discrepancy and ADFEE when we pool our sample together. However, when we divide our samples into large firms and small firms, we find that such a negative relationship only holds for big-size firms while for small-size firms, ADFEE are positively correlated. This discrepancy being due to small firms’ lack of bargain power and the increase in auditing risk. In addition, we find that company size moderates the effect of such discrepancies on ADFEE in a nonlinear fashion.

Suggested Citation

  • Nan Hu & Fangjun Wang & Peng Wang & Lee Yao & Junrui Zhang, 2012. "The impact of ultimate ownerships on audit fees: evidence from Chinese listed companies," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 19(3), pages 352-373.
    • Handle: RePEc:taf:raaexx:v:19:y:2012:i:3:p:352-373
    DOI: 10.1080/16081625.2012.667510
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    Cited by:

    1. Fangjun Wang & Luying Xu & Fei Guo & Junrui Zhang, 2020. "Loan Guarantees, Corporate Social Responsibility Disclosure and Audit Fees: Evidence from China," Journal of Business Ethics, Springer, vol. 166(2), pages 293-309, October.
    2. Ruiqi, Wang & Wang, Fangjun & Xu, Luying & Yuan, Changhong, 2017. "R&D expenditures, ultimate ownership and future performance: Evidence from China," Journal of Business Research, Elsevier, vol. 71(C), pages 47-54.
    3. In Tae Hwang & Sun Min Kang & Shun Ji Jin, 2014. "A delisting prediction model based on nonfinancial information," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 21(3), pages 328-347, September.

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