The impact of ultimate ownerships on audit fees: Evidence from Chinese listed companies
Publication Type
Journal Article
Publication Date
1-2012
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.
Keywords
ultimate owner, ownership structure, pyramid hierarchy, audit fees
Discipline
Accounting | Asian Studies | Corporate Finance | Databases and Information Systems | Finance and Financial Management
Research Areas
Information Systems and Management
Publication
Asia-Pacific Journal of Accounting & Economics
Volume
19
Issue
3
First Page
352
Last Page
373
ISSN
1608-1625
Identifier
10.1080/16081625.2012.667510
Publisher
Routledge
Citation
HU, Nan; WANG, Fanjun; WANG, Peng; YAO, Lee J.; and ZHANG, Junrui.
The impact of ultimate ownerships on audit fees: Evidence from Chinese listed companies. (2012). Asia-Pacific Journal of Accounting & Economics. 19, (3), 352-373.
Available at: https://ink.library.smu.edu.sg/sis_research/8047
Copyright Owner and License
Authors
Additional URL
https://doi.org/10.1080/16081625.2012.667510