Chinese companies’ transparency under sustainable development goals: the role of asset impairment and biological assets in audit

The paper aims to analyse the role of asset impairment and biological assets in the company’s audit and to estimate the impact of asset impairment losses and biological asset scale on audit fees. The object of the investigation was A-share listed companies from 2012 to 2021 in China. The study analysed 370 listed companies to obtain 28741 observations, of which 367 listed companies had 1854 observations with biological assets. The study applied the fixed effect model, three-step mediation test, Sobel mediation test and PSM matching test. The results show that asset impairment loss and biological asset size are significantly positively correlated with audit fees, and the scale of biological assets will strengthen the positive correlation between asset impairment loss and audit fees. It is further found that asset impairment and biological assets positively affect audit fees through two parallel intermediary paths of "audit working hours" and "violations". Finally, based on the above findings, this paper also attempts to make optimisation recommendations for the four relevant stakeholders involved in the audit. This paper contributes to improving accounting standards for biological assets and enriching the research on audit pricing based on the empirical justifications of their role in the company’s audit.