Employee quality and audit fee: evidence from China

Xing Li, Xia Chen, Baolei Qi and Gaoliang Tian

Accounting and Finance, 2020, vol. 60, issue 5, 4533-4566

Abstract: This study investigates the association between employee quality and audit fee. Using data for firm‐level employee quality (as proxied by employee education) from Chinese listed firms from 2011 to 2018, we find that firms operated by high‐quality employees enjoy lower audit charges. The association between employee quality and audit fee is more pronounced in firms with a culture of high integrity. Our 2SLS estimation helps us establish a causal link between employee quality and audit fee. The final validity tests suggest that high‐quality employees contribute to lower audit fee by reducing audit risk and audit effort.

Date: 2020
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