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

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1080/16081625.2012.667510

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