Multiple large shareholders and audit fees: Demand-side evidence from China

IF 2.2 3区管理学 Q2 BUSINESS, FINANCE

Journal of Business Finance & Accounting Pub Date : 2024-06-15 DOI:10.1111/jbfa.12816

Xiaotong Yang, Fuxiu Jiang, John R. Nofsinger, Bo Zhang

{"title":"Multiple large shareholders and audit fees: Demand-side evidence from China","authors":"Xiaotong Yang, Fuxiu Jiang, John R. Nofsinger, Bo Zhang","doi":"10.1111/jbfa.12816","DOIUrl":null,"url":null,"abstract":"<p>This paper provides evidence on the role of multiple large shareholders (MLSs) in the determination of audit pricing from a new demand-side perspective, rather than the typical supply-side perspective. We find that for Chinese A-share listed firms, the presence of MLS is associated with significantly higher audit fees. The results are robust after we address endogeneity concerns and use auditor choice as an alternative proxy to capture demand for auditing. Further tests show that audit fees increase with the number and relative power of noncontrolling large shareholders. The positive impact of MLS on audit fees is more pronounced for state-owned enterprises (SOE) than in family-owned enterprises. Moreover, this positive impact of MLS is more pronounced for SOEs with foreign blockholders and non-SOEs with independent institutional blockholders. This positive impact is also more pronounced for firms with higher information asymmetry, severe agency problems and higher litigation risk. Overall, our results provide consistent evidence that firms with MLS are likely to demand high-quality auditing, leading to higher audit fees.</p>","PeriodicalId":48106,"journal":{"name":"Journal of Business Finance & Accounting","volume":"52 1","pages":"342-373"},"PeriodicalIF":2.2000,"publicationDate":"2024-06-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Journal of Business Finance & Accounting","FirstCategoryId":"91","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/jbfa.12816","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}

引用次数: 0

Abstract

This paper provides evidence on the role of multiple large shareholders (MLSs) in the determination of audit pricing from a new demand-side perspective, rather than the typical supply-side perspective. We find that for Chinese A-share listed firms, the presence of MLS is associated with significantly higher audit fees. The results are robust after we address endogeneity concerns and use auditor choice as an alternative proxy to capture demand for auditing. Further tests show that audit fees increase with the number and relative power of noncontrolling large shareholders. The positive impact of MLS on audit fees is more pronounced for state-owned enterprises (SOE) than in family-owned enterprises. Moreover, this positive impact of MLS is more pronounced for SOEs with foreign blockholders and non-SOEs with independent institutional blockholders. This positive impact is also more pronounced for firms with higher information asymmetry, severe agency problems and higher litigation risk. Overall, our results provide consistent evidence that firms with MLS are likely to demand high-quality auditing, leading to higher audit fees.

查看原文本刊更多论文

多个大股东与审计费用：来自中国的需求方证据

本文从一个新的需求方视角，而非典型的供给方视角，提供了多个大股东（MLS）在审计定价决定中的作用的证据。我们发现，对于中国 A 股上市公司而言，MLS 的存在与更高的审计费用相关。在我们解决了内生性问题并使用审计师选择作为替代变量来捕捉审计需求后，结果是稳健的。进一步的测试表明，审计费用随着非控股大股东的数量和相对权力的增加而增加。与家族企业相比，MLS 对审计费用的积极影响在国有企业中更为明显。此外，对于拥有外资大股东的国有企业和拥有独立机构大股东的非国有企业而言，MLS 的积极影响更为明显。对于信息不对称程度较高、存在严重代理问题和诉讼风险较高的企业，这种积极影响也更为明显。总体而言，我们的研究结果提供了一致的证据，即拥有 MLS 的公司可能会要求高质量的审计，从而导致更高的审计费用。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

求助全文

约1分钟内获得全文求助全文

来源期刊

Journal of Business Finance & Accounting BUSINESS, FINANCE-

CiteScore

4.40

自引率

17.20%

发文量

期刊介绍： Journal of Business Finance and Accounting exists to publish high quality research papers in accounting, corporate finance, corporate governance and their interfaces. The interfaces are relevant in many areas such as financial reporting and communication, valuation, financial performance measurement and managerial reward and control structures. A feature of JBFA is that it recognises that informational problems are pervasive in financial markets and business organisations, and that accounting plays an important role in resolving such problems. JBFA welcomes both theoretical and empirical contributions. Nonetheless, theoretical papers should yield novel testable implications, and empirical papers should be theoretically well-motivated. The Editors view accounting and finance as being closely related to economics and, as a consequence, papers submitted will often have theoretical motivations that are grounded in economics. JBFA, however, also seeks papers that complement economics-based theorising with theoretical developments originating in other social science disciplines or traditions. While many papers in JBFA use econometric or related empirical methods, the Editors also welcome contributions that use other empirical research methods. Although the scope of JBFA is broad, it is not a suitable outlet for highly abstract mathematical papers, or empirical papers with inadequate theoretical motivation. Also, papers that study asset pricing, or the operations of financial markets, should have direct implications for one or more of preparers, regulators, users of financial statements, and corporate financial decision makers, or at least should have implications for the development of future research relevant to such users.