TY - JOUR
T1 - Board reforms and audit fees
T2 - international evidence
AU - Huang, Yuan
AU - Li, Xiao
AU - Song, Zilong
N1 - Funding Information:
*We thank Agnes Cheng, Ferdinand Gul, Haiyan Zhou and seminar participants at the Central University of Economics and Finance, Hong Kong Polytechnic University, National Chiao Tung University, Shanghai Lixin University of Accounting and Finance, and conference participants at the 2nd China Finance and Accounting Research Conference, 2019 American Accounting Association annual conference and 13th International Finance Conference for helpful comments. Xiao Li acknowledges financial support from the National Natural Science Foundation of China (Project No. 71802205). Zilong Song acknowledges financial support from the Project of Young Research Institute of Humanities and Social Science of Ministry of Education in China (Project No.19YJC790113). All errors are our own.
Publisher Copyright:
© 2020 City University of Hong Kong and National Taiwan University.
PY - 2022/9
Y1 - 2022/9
N2 - With a difference-in-differences approach, we find that world-wide reforms result in higher audit fees for reform firms. And this is specially so for reforms involving components of director independence and/or audit committee and auditor independence, adopting the rule-based approach, and implemented in countries with weaker institutional quality. Further analysis reveals that the increase in audit fees is driven by the increase in auditors’ efforts and auditees’ litigation risk, while the improved financial reporting quality has a negative effect on audit fees. Overall, our study examines one compliance cost, as well as its variations, of the board reforms.
AB - With a difference-in-differences approach, we find that world-wide reforms result in higher audit fees for reform firms. And this is specially so for reforms involving components of director independence and/or audit committee and auditor independence, adopting the rule-based approach, and implemented in countries with weaker institutional quality. Further analysis reveals that the increase in audit fees is driven by the increase in auditors’ efforts and auditees’ litigation risk, while the improved financial reporting quality has a negative effect on audit fees. Overall, our study examines one compliance cost, as well as its variations, of the board reforms.
KW - audit fees
KW - Board reforms
KW - demand effect
UR - https://www.scopus.com/pages/publications/85099594259
U2 - 10.1080/16081625.2020.1870510
DO - 10.1080/16081625.2020.1870510
M3 - Journal article
AN - SCOPUS:85099594259
SN - 1608-1625
VL - 29
SP - 1227
EP - 1246
JO - Asia-Pacific Journal of Accounting and Economics
JF - Asia-Pacific Journal of Accounting and Economics
IS - 5
ER -