Volatility of other comprehensive income and audit fees: evidence from China

Md Jahidur Rahman () and Tong Wu
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Md Jahidur Rahman: Wenzhou-Kean University
Tong Wu: Wenzhou-Kean University

International Journal of Disclosure and Governance, 2021, vol. 18, issue 1, No 1, 15 pages

Abstract: Abstract Managers make numerous subjective judgments about other comprehensive income (OCI) due to the fair-value measurement, which increases the auditing risks and challenges for auditors. This study investigates the relationship between audit fees and the volatility of OCI in China using a large sample of Chinese A-share listed companies from 2014 to 2018. Such relationship cannot be confirmed for these companies, including those audited by Big 4 firms and the top 10 accounting firms in China, but is significantly positive for those audited by experienced auditors. Results indicate that audit firms in China generally do not seriously consider risks concerning the volatility of OCI. However, auditors with long tenures are more aware of these risks and have correspondingly higher prices compared with their peers.

Keywords: Other comprehensive income; Audit fees; Audit tenure; Big 4 firms (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1057/s41310-020-00100-2

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