RELATIONSHIP BETWEEN ABNORMAL AUDIT FEES AND THE EARNINGS RESPONSE COEFFICIENT: AN ANALYSIS OF CHINA'S LISTED COMPANIES

Wen-Jye Hung ； Tsui-Lin Chiang ； Yamin Wang ； Jian Hua

《Advances in Quantitative Analysis of Finance and Accounting》 19期 (2022/12) Pp. 187-212

https://doi.org/10.6293/AQAFA.202212_(19).0006

摘要

As a key indicator of earnings quality, the earnings response coefficient has been widely examined in the context of financial distress for two decades. When managers use their reporting discretion to smooth earnings over time, how informative earnings information is can be either improved or impaired depending on the managerial incentives underlying the earnings manipulations. In addition, abnormal audit fees and audit quality are strongly related. Therefore, this paper investigates the impact of abnormal audit fees on earnings quality using the earnings response coefficient as a proxy. Based on 890 firm-year observations from the Shanghai Stock Exchange and Shenzhen Stock Exchange in China, the empirical results indicate a significant positive relationship between informative firms' earnings information and abnormal audit fees.

關鍵字

Abnormal Audit Fee ； Earnings Response Coefficient ； Earnings Quality

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