Product market competition and audit fees: evidence from the Chinese manufacturing industry

IF 2.1 Q2 BUSINESS, FINANCE

Pacific Accounting Review Pub Date : 2022-12-23 DOI:10.1108/par-11-2021-0180

Zhenbo Zhang, Yuxuan Zhang, Mengfan Yan

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引用次数: 0

Abstract

Purpose This paper aims to explore the impact of product market competition (PMC) on companies’ investment in external auditing. Design/methodology/approach This paper applies a conceptual framework derived from demand–supply analysis and a panel data set of 2,263 listed manufacturing companies in China covering the period 2012–2019. In the assessment of PMC, this study measures industry-level competition intensity and company-specific market power separately. Findings Industries appear to engage in a lower average level of external auditing if industrial competition intensity is either too high or too low. Similarly, companies spend less on external auditing if their market power is either too strong or too weak, and the company-level inverted U-shaped relationship is much more evident in industries with weak PMC. Originality/value This paper shows that a company’s external audit strategy is affected by the level of competition it faces in its market. The findings of this paper can improve the current linear PMC–auditing theoretical framework and provide insights into the strategic auditing of listed companies in China. The findings also have significant implications for policy recommendations regarding corporate governance and market scrutiny regulations.

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产品市场竞争与审计费用:来自中国制造业的证据

目的探讨产品市场竞争对企业外部审计投资的影响。设计/方法论/方法本文应用了供需分析得出的概念框架和2012-2019年中国2263家上市制造业公司的面板数据集。在对PMC的评估中，本研究分别衡量了行业层面的竞争强度和公司特定的市场力量。如果行业竞争强度过高或过低，FindingsIndustries的外部审计平均水平似乎较低。同样，如果公司的市场力量太强或太弱，公司在外部审计上的支出就会减少，而公司层面的倒U型关系在PMC较弱的行业中更为明显。原创性/价值本文表明，一家公司的外部审计策略受到其市场竞争水平的影响。本文的研究结果可以完善现有的线性PMC审计理论框架，为我国上市公司战略审计提供借鉴。研究结果还对有关公司治理和市场审查法规的政策建议具有重要意义。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Pacific Accounting Review BUSINESS, FINANCE-

CiteScore

3.80

自引率

9.50%

发文量

期刊介绍： Pacific Accounting Review is a quarterly journal publishing original research papers and book reviews. The journal is supported by all New Zealand Universities and has the backing of academics from many universities in the Pacific region. The journal publishes papers from both empirical and theoretical forms of research into current developments in accounting and finance and provides insight into how present practice is shaped and formed. Specific areas include but are not limited to: - Emerging Markets and Economies - Political/Social contexts - Financial Reporting - Auditing and Governance - Management Accounting.