Association between executives’ foreign background and audit fees

Wunhong Su and Chen Yin

Review of Accounting and Finance, 2023, vol. 23, issue 2, 186-204

Abstract: Purpose - This study aims to investigate the association between executives with foreign backgrounds and the audit fees paid by the Chinese-listed firms over the period from 2010 to 2020. Design/methodology/approach - To examine the association between executives’ foreign experience and audit fees, this study constructs the following empirical model:Lnfeei,t= β0+ β1Foreign backgroundi,t+ ∑βjControli,t+ YearFE + IndFE + εi,t(1). Findings - This study finds that auditors charge higher fees for firms hiring more executives with foreign backgrounds. The results are robust to a battery of robustness checks, including fixed effects, alternative measures of independent variable, controlling for other characteristics of executives and auditors and entropy balancing method. Originality/value - This study sheds light on how executives’ foreign backgrounds affect audit fees, enriching the literature on executive heterogeneity and audit fees and providing important implications for audit practitioners.

Keywords: Foreign background; Audit fee; Audit risk; Auditor effort; Outward foreign direct investment; G32; M12; M42 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eme:rafpps:raf-12-2022-0330

DOI: 10.1108/RAF-12-2022-0330

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