Access the full text.
Sign up today, get DeepDyve free for 14 days.
Dennis Chung, W. Lindsay (1988)
The pricing of audit services: The Canadian perspective*Contemporary Accounting Research, 5
D. Simunic (1980)
The Pricing Of Audit Services - Theory And EvidenceJournal of Accounting Research, 18
Randolph Beatty (1993)
THE ECONOMIC-DETERMINANTS OF AUDITOR COMPENSATION IN THE INITIAL PUBLIC OFFERINGS MARKETJournal of Accounting Research, 31
J. Heckman (1979)
Sample selection bias as a specification errorApplied Econometrics, 31
J. Kornai (1993)
The Evolution of Financial Discipline under the Postsocialist SystemKyklos, 46
(1996)
The impact of litigation risk on audit pricing: A review
M. Faccio, Ronald Masulis, John Mcconnell (2005)
Political Connections and Corporate BailoutsCorporate Finance: Governance
(2003)
The influence of earnings management on audit fees
T. Anderson, Daniel Zéghal (1994)
The Pricing of Audit Services: Further Evidence from the Canadian MarketAccounting and Business Research, 24
(2007)
Does size really matter? A test from the perspective of accounting conservatism
(2003)
The determinants of the audit fees of Chinese listed companies
Jong-il Park (2006)
The Association between Audit Committee Characteristics and Audit Effort
(2004)
The regulation signal, risk estimation and audit pricing: Evidence
C. Xinyuan, L. Mochou, X. Lijun (2010)
Judiciary Independence and The Enforcement of Investor Protection Laws: Market Responses to the "1/15" Notice of the Supreme People's Court of ChinaChina Economic Quarterly
(2003)
Ultimate owner, ownership structure and firm performance
(1996)
The impact of litigation risk on audit pricing: A review of the economics and the evidence
Mark Defond, Jere Francis, T. Wong (2000)
Auditor Industry Specialization and Market Segmentation: Evidence from Hong KongEar and Hearing, 19
J. Kornai (1988)
Individual freedom and reform of the socialist economyEuropean Economic Review, 32
Jong-Hag Choi, Jeong‐Bon Kim, Xiaohong Liu, D. Simunic (2008)
Audit pricing, legal liability regimes, and big 4 premiums: Theory and cross-country evidenceContemporary Accounting Research, 25
(2011)
International Big Four accounting firms and high auditing quality: Evidence from China's securities market
(2005)
The effect of risk on the audit fees of Chinese
(2005)
The effect of risk on the audit fees of Chinese listed companies
刘国光 (1997)
China’s Securities Market
(2009)
Accounting standard reform, information accuracy and value relevance
L. Deangelo (1981)
Auditor size and audit qualityJournal of Accounting and Economics, 3
(2009)
The number of bankruptcy firms arrives at 4900 in Guangdong province under the financial crisis
A. Rushinek, S. Rushinek (1990)
The effect of audit firm size on audit pricesOmega-international Journal of Management Science, 18
(2004)
The determinant of audit fee: An empirical analysis
(2002)
Risk based auditing, litigation risk and auditing quality
(2004)
The regulation signal, risk estimation and audit pricing: Evidence from auditor change
Mark Defond, T. Wong, Shuhua Li (1999)
The Impact of Improved Auditor Independence on Audit Market Concentration in ChinaUSC Marshall School of Business Research Paper Series
R. Dye (1993)
Auditing Standards, Legal Liability, and Auditor WealthJournal of Political Economy, 101
(1985)
An analysis of audit fees and their determinants in New Zealand
(2007)
The regulatory risk and audit pricing of China's listed commercial banks
Ananth Seetharamana, Ferdinand Gulb, Stephen Lynnb (2002)
Litigation risk and audit fees: evidence from UK firms cross-listed on US marketsJournal of Accounting and Economics, 33
Jere Francis (1984)
The effect of audit firm size on audit prices: A study of the Australian MarketJournal of Accounting and Economics, 6
F. Gul, J. Tsui (1997)
A test of the free cash flow and debt monitoring hypotheses:: Evidence from audit pricingJournal of Accounting and Economics, 24
China Journal of Accounting Studies, 2013 Vol. 1, No. 1, 47–61, http://dx.doi.org/10.1080/21697221.2013.781766 The risk premium of audit fee: Evidence from the 2008 financial crisis a b Tianshu Zhang and Jun Huang * School of Accountancy, Shanghai Institute of Foreign Trade, People’s Republic of China; Institute of Accounting and Finance, Shanghai University of Finance and Economics, People’s Republic of China This paper uses the 2008 financial crisis to examine the association between audit pricing and firm risk. The empirical analysis shows that when firm risk increased during the crisis, accounting firms charged more for their auditing services, support- ing the risk premium of audit fee. An analysis of different industries presents a posi- tive correlation between the audit fees and firm risk for export companies that were seriously shocked by the crisis. Further, compared with private firms, the audit fees of State-Owned Enterprises (SOEs) did not increase with firm risk under the crisis, due to the government’s bailout guarantee. Finally, the risk premium of audit fee was only found for companies audited by non-Big Four accounting firms. Keywords: audit fee; financial crisis; firm risk; risk premium 1. Introduction The recent recession in the US, beginning with the bankruptcy of Lehman Brothers in September 2008 and the subsequent collapse of the US sub-prime mortgage market, had a ripple effect around the world. At the micro level, firms became vulnerable as a result of the global credit squeeze; for example, more than 4900 firms in Guangdong province had gone bankrupt by the end of 2008 (Huang, 2009). As firm risk increases during a crisis, an interesting question is whether auditors pay attention to it and how this further relates to their provision of services. Unfortunately, the literature does not provide a satisfactory answer. In this paper, we use the 2008 financial crisis as an exog- enous event to investigate the increased risk premium on audit fees. Since the pioneering research of Simunic (1980), the literature has explored various determinants of audit pricing, such as firm size, asset structure, business complexity and audit opinion (Anderson & Zeghal, 1994; DeFond, Francis, & Wong, 2000; Francis, 1984; Firth, 1985). Simunic (1980) argues that firm risk should be an important factor of audit fees, because it influences the amount of effort expended by accounting firms and the potential cost of a lawsuit. For example, auditors might implement more proce- dures and face a higher possibility of lawsuit for risky firms, which would incur a risk premium on audit fee (Li & Wu, 2004). However, whether audit pricing is associated with firm risk is still unclear. Studies in China and other countries draw inconsistent conclusions (Gul & Tsui, 1998; Seetharaman, Gul, & Lynn, 2002; Simunic & Stein, *Corresponding author. Email: huangjun@mail.shufe.edu.cn Paper accepted by Xi Wu. 2013 Accounting Society of China 48 Zhang and Huang 1996; Wu, 2003; Zhang, Chen, & Wu, 2005; Zhu & Yu, 2004). A more important issue is that the endogeneity problem is ignored in the extant research, thus reducing the reli- ability of conclusions. The 2008 global financial crisis provides a good opportunity to examine the rela- tionship between firm risk and audit fees. First, numerous companies have suffered in this global crisis. Owing to declining demand and tightened monetary policies, most firms’ operating risks have increased. This situation allows us to analyze how account- ing firms respond to this increased risk, by examining changes in their audit fees. Sec- ond, as the crisis came as a shock, changes in audit fees should be a reaction to incremental risk, thus providing a natural experimental research setting and avoiding the endogeneity problem. Finally, because the financial crisis affected firms differently, we can deepen our analysis by comparing across industries, types of ownership, and auditors to improve our understanding of the risk premium on audit fee. Our paper makes several contributions to the literature. First, although firm risk is theoretically a predictor of audit fees, the evidence is far from conclusive. We examine the risk premium on audit pricing empirically, which increases our knowl- edge of the relationship between firm risk and audit fees. Second, by analyzing audit fees during the 2008 financial crisis, our analysis provides a new perspective on how the crisis influenced firm behavior and sheds light on the aftermath of this recession. Third, our research shows that state ownership lends an implicit guarantee to SOEs that influences the behavior of accounting firms, as shown by the effect of state ownership on the risk premium of audit fee. Last but not least, our paper has implications for research methodology. We employ the 2008 financial crisis as an exogenous event to investigate how audit fees change with incremental firm risk, thus eliminating the endogeneity problem in the analysis. The remainder of this paper proceeds as follows. Section 2 reviews the literature. Section 3 develops our hypotheses. Section 4 introduces the sample, data and model, and gives the summary statistics. Section 5 presents the empirical results about the risk premium of audit fee. Section 6 further analyzes how the risk premium is generated. Section 7 performs some robustness tests, and Section 8 concludes the paper. 2. Literature review Since Simunic (1980) first analyzed the determinants of audit fees, various factors relat- ing to accounting firms’ charges have been investigated. (1) Firm size: audit fees are positively correlated with firm size (Simunic, 1980). (2) Asset structure: Simunic (1980) and Firth (1985) find that accounts receivables and inventories can explain audit pric- ing. (3) Business complexity: the number of subsidiaries is a determinant of audit fees (Anderson & Zeghal, 1994; Francis, 1984). (4) Audit opinion: Simunic (1980) finds that audit opinion influences auditors’ charges. (5) Accounting firm: the literature provides evidence that the characteristics of accounting firms, such as their size and reputation, are related to audit fees (Beatty, 1993; DeFond, Francis, & Wong, 2000; Francis, 1984). (6) Corporate governance: Abbott, Parker, Paters, and Raghunandan (2003) suggest that audit fees are affected by firms’ governance structure, such as the presence of an audit committee. Theoretically, firm risk should be an important factor on audit fees because it influences the amount of effort and the lawsuit cost of accounting firms. However, the empirical evidence is inconclusive. For example, Simunic (1980) and Simunic and Stein (1996) find that audit fees increase with firm risk. Gul and Tsui (1998) China Journal of Accounting Studies 49 show that the risk measure of free cash flow positively correlates with audit pricing. Choi, Kim, Liu, and Simunic (2008) employ data from 15 countries and provide evidence that audit fees are higher under better legal regimes because of the enhanced possibility of lawsuit. Although the above analyses confirm that firm risk is positively related to audit fees, there are different findings. Francis (1984) argues that firm risk cannot explain audit pricing, based on an analysis of Australian companies. Employing Canadian data, Chung and Lindsay (1988) find that audit fees do not increase with firms’ operational risks. Further, the analysis of Seetharaman et al. (2002) shows that audit fees for listed companies in Britain are unrelated to risk. As for Chinese firms, the risk premium of audit fee is unclear. Zhang et al. (2005) find that auditors charge more when companies are burdened with higher loan guaran- tees. Using commercial banks as their sample, Liu and Zhou (2007b) document that risk measures such as customer concentration, the asset sensitivity gap, return on capi- tal, and the capital adequacy rate are important determinants of audit fees. In contrast, the research of Liu, Sun, and Liu (2003), Wu (2003), Zhu and Yu (2004) show that firm risk cannot explain audit pricing, whether employing firm leverage or performance as the risk measure. Overall, the literature does not provide a clear picture of how audit fees are associ- ated with firm risk. Moreover, the analyses ignore the fact that the relationship between firm risk and audit fees might be endogenous, which lowers the reliability of the related findings. We use the 2008 financial crisis as an exogenous event to examine the risk premium of audit fee after controlling for endogeneity. 3. Hypothesis development The audit fee paid to accounting firms is usually composed of three parts. The first is the fixed cost of carrying out the necessary audit processes and issuing an audit report. The second is the risk cost, defined as the expected loss due to audit failure, including the cost of a lawsuit and loss of reputation. The third is the accounting firm’s profit, determined by the local economy and market competition. Of the three components, the fixed cost and risk cost are related to firm risk. When companies experience high uncertainty, accounting firms should implement more audit- ing work to reduce the possibility of offering an incorrect audit opinion when financial reports are materially misrepresented. For example, they may implement more account receivable confirmations and inventory counts, which could increase the fixed cost of the audit. Moreover, the possibility of distress and bankruptcy is higher for risky com- panies, which increases the potential lawsuit cost and reputation loss to accounting firms, thus further raising the risk cost of the audit. Following the 2008 financial crisis, firms faced high risk due to low product demand and tightened bank credit. For example, sales went down, inventories were overstocked, and account receivables were difficult to collect. All these cast more doubt on firms’ futures. Furthermore, when firm performance declines under a crisis, managers have more incentives to manipulate earnings to ensure good compensation and beat analysts’ forecasts, resulting in a higher possibility of misrepresentation in financial statements. To avoid issuing an incorrect audit opinion, auditors might carry out more audit procedures and increase the scope of the audit, leading to a higher fixed cost of audit. Moreover, when companies are vulnerable to bankruptcy and the odds of accounting fraud increase after a crisis, accounting firms face a higher risk of lawsuit 50 Zhang and Huang and would ask for more risk compensation. Based on this analysis, we propose our first hypothesis. Hypothesis 1: The audit fee increases with firm risk under the financial crisis. Although the impact of the 2008 financial crisis was undoubtedly widespread, and a great many companies suffered as a result, the effects differed across industries. The cri- sis began with the collapse of the US sub-prime mortgage market and immediately spread to other countries. The downturn in the economic prospects of Western coun- tries, with rising unemployment rates and decreasing consumption expenditure, led to a decline in product demand from emerging markets. The crisis seriously shocked export firms, and they are more likely to manipulate earnings. The possibility of bankruptcy for export firms is also higher, which increases the lawsuit risk. To avoid audit failure, accounting firms may need to implement additional audit procedures and require more risk compensation, resulting in higher audit fees. This leads to our second hypothesis. Hypothesis 2: The risk premium of audit fee is more significant for export firms than for non-export firms under the financial crisis. One notable feature of China’s stock market is that SOEs account for a large pro- portion of listed companies (Liu, Sun, & Liu 2003). The level of state ownership was still as high as 50.2% at the end of 2006. Kornai (1988, 1993) argues that state owner- ship provides an implicit assurance to SOEs. Once SOEs fall into distress, the govern- ment is more likely to bail them out to avoid the prospect of much unemployment and society instability. The analysis of Faccio, McConnell, and Masulis (2006) provides supporting evidence for this argument. As government bailout reduces the possibility of a subsequent lawsuit, accounting firms should require less risk compensation. SOEs, therefore, should incur lower risk premiums than private firms. This leads to our third hypothesis. Hypothesis 3: The risk premium of audit fee is more significant for private firms than for SOEs under the financial crisis. Finally, we discuss how auditors influence the risk premium on audit fee. The Big Four accountancy firms tend to produce higher-quality audits. DeAngelo (1981) and Dye (1993) state that to maintain their reputation, the Big Four have better control of the audit process and their audit quality is considered to be better. When firm risk increased under the financial crisis, the Big Four may have implemented stricter audit procedures and required more risk compensation, generating a significant risk premium. However, whether the Big Four have a higher quality audit in an emerging market such as China remains in question. First, Liu and Xu (2002) point out that compared to domestic accounting firms, the Big Four face a lower risk of lawsuit because of political privilege and public relationship building. Second, Chinese listed companies lack the demand for high-quality audit due to state ownership concentration, IPO market regula- tion, and weak protection of property rights (DeFond, Wong, & Li, 2000). Thus, the Big Four may have little incentive to provide good quality audits in China. Finally, recent empirical evidence shows that the audit quality of the Big Four is no better than that of non-Big Four and sometimes even worse (Guo, 2011; Liu & Zhou, 2007a). Therefore, we do not make a prediction about how a Big Four audit influences the risk China Journal of Accounting Studies 51 premium of audit fee under the crisis, and empirically test this question in the later analyses. 4. Research design 4.1. Sample The 2008 financial crisis began with the bankruptcy of Lehman Brothers in September 2008, and quickly spread to other countries. China’s economy also experienced a slow- down in 2008 because of the crisis. To promote economic growth, the Chinese govern- ment implemented an RMB4 trillion economic stimulus program and the economy started to recover in the second half of 2009. Thus, we choose all listed companies in 2008 as our sample. We also include 2007 data as a comparison to figure out the shock of the financial crisis. For consistency, we do not include data before 2007 because the financial reports of listed companies have changed considerably since China’s new accounting standards were issued in 2006 (Zhu, Zhao, & Sun, 2009). Finally, we exclude observations within two years of firms’ IPOs because audit fees are usually higher around the time of IPOs. 4.2. Data The audit fee data are taken from the CCER China Security Market Database. The financial data on listed companies are taken from the China Stock Market and Account- ing Research Database (CSMAR). The WIND Database provides the information on firms’ ultimate owners. Finally, the export data come from the China Industrial Compa- nies Database compiled by the Chinese National Bureau of Statistics. 4.3. Model We employ the following model to investigate the risk premium of audit fee under the crisis: Fee log ¼ a þ a ROA þ a Crisis þ a ROA Crisis þ a Size þ a Lev þ a Liquidity 0 1 2 3 4 5 6 P P þa Diversify þ a Big4 þ a Age þ Industry þ Region þ e; 7 8 9 ð1Þ where Fee_log is the natural logarithm of audit fee, adjusted by the annual inflation rate. Following Simunic (1980) and Francis (1984), we employ firm performance as our risk measure, defined as the ratio of net income to total assets (ROA). Crisis is a dummy variable, equal to one if the fiscal year is 2008 and zero otherwise. The control variables are as follows: Size is the natural logarithm of total assets; Lev denotes the ratio of debts to total assets; Liquidity is current assets divided by current liabilities; Diversify stands for the segment number; Big4 is a dummy variable, equal to one if a firm employs a Big Four auditor and zero otherwise; Age refers to the number of years since a firm was listed; and Industry and Region are the industry and region dummy variables, respectively. The interaction item ROACrisis examines how firm risk relates to audit fees under the crisis. If the coefficient α is significantly negative, it means that accounting firms charge more to firms with higher risk, supporting the risk premium of audit fee. 52 Zhang and Huang Table 1. Summary statistics. Variable Obs. Mean Median Std. Min. Max. Fee 2173 72.71 50.00 161.3 10.00 5821 ROA 2173 0.0320 0.0334 0.1232 –0.9548 0.6256 Crisis 2173 0.5513 1.00 0.4975 0.00 1.00 Size 2173 21.46 21.41 1.278 10.84 27.35 Lev 2173 0.2322 0.2107 0.2108 0.00 1.821 Liquidity 2173 1.457 1.137 1.348 0.0386 12.44 Diversify 2173 2.341 2.00 1.334 1.00 9.00 Big4 2173 0.0529 0.00 0.2239 0.00 1.00 Age 2173 10.31 11.00 3.653 3.00 19.00 Fee represents audit fees, in units of RMB10,000. ROA is defined as the ratio of net income to total assets. Crisis is a dummy variable, equal to one if the fiscal year is 2008 and zero otherwise. Size is the natural loga- rithm of total assets. Lev is the ratio of debts to total assets. Liquidity equals current assets divided by current liabilities. Diversify is the segment number. Big4 is a dummy variable, equal to one if a firm employs a Big Four auditor and zero otherwise. Age is the number of years a firm has been listed. Table 2. Pearson correlations. Fee ROA Crisis Size Lev Liquidity Diversify Big4 ROA –0.0012 (0.956) Crisis 0.0331 –0.0962 (0.123) (0.000) Size 0.3579 0.0553 0.0225 (0.000) (0.010) (0.294) Lev 0.0147 –0.2383 –0.0206 –0.0312 (0.493) (0.000) (0.337) (0.156) Liquidity –0.0699 0.1415 0.0121 –0.0833 –0.3774 (0.001) (0.000) (0.572) (0.000) (0.000) Diversify 0.0579 –0.0081 –0.0145 0.1147 0.0055 –0.0687 (0.007) (0.707) (0.498) (0.000) (0.799) (0.001) Big4 0.4361 0.0206 0.0149 0.3496 0.0060 –0.0690 0.0048 (0.000) (0.338) (0.488) (0.000) (0.781) (0.001) (0.824) Age 0.0063 –0.0731 0.0673 –0.0173 0.0727 –0.0847 0.1789 –0.0045 (0.770) (0.001) (0.002) (0.422) (0.001) (0.000) (0.000) (0.835) Fee represents audit fees, in units of RMB10,000. ROA is defined as the ratio of net income to total assets. Cri- sis is a dummy variable, equal to one if the fiscal year is 2008 and zero otherwise. Size is the natural logarithm of total assets. Lev is the ratio of debts to total assets. Liquidity equals current assets divided by current liabili- ties. Diversify is the segment number. Big4 is a dummy variable, equal to one if a firm employs a Big Four auditor and zero otherwise. Age is the number of years a firm has been listed. P values are in parentheses. 4.4. Statistics Table 1 reports the descriptive statistics. The mean audit fee is RMB727,000, and the median is RMB500,000; however, there is significant variance among the audit fees of sample firms. For example, the minimum is RMB100,000 and the maximum is close to RMB60 million. The Crisis statistic shows that the mean value is 0.5513, indicating that crisis sample firms are closely matched to non-crisis sample firms. The table shows that the average ROA is 0.0320, and debts on average account for 23.33% of total assets. Further, the mean ratio of current assets to current liabilities is 1.457 and firms on average operate 2.341 segments. Interestingly, only 5.29% of firms employ Big Four auditors. Finally, the average number of years since listing is 10.31. China Journal of Accounting Studies 53 Table 3. Results for the risk premium on audit fee. 2008 As the Crisis Period 2009 As the Crisis Period Coefficient P Value Coefficient P Value Variables (1) (2) (3) (4) ROA 0.2991 (0.556) 0.2406 (0.191) ⁄⁄⁄ ⁄⁄⁄ Crisis 0.0501 (0.004) 0.1402 (0.000) ⁄⁄ ⁄⁄ ROACrisis –0.3422 (0.015) –0.5020 (0.037) ⁄⁄⁄ ⁄⁄⁄ Size 0.2395 (0.000) 0.1473 (0.000) ⁄⁄⁄ Lev 0.1941 (0.000) 0.0836 (0.280) ⁄⁄⁄ ⁄⁄⁄ Liquidity –0.0282 (0.000) –0.0297 (0.005) ⁄⁄⁄ Diversify 0.0237 (0.001) 0.0143 (0.187) ⁄⁄⁄ ⁄⁄⁄ Big4 1.0289 (0.000) 0.5563 (0.000) ⁄⁄⁄ Age 0.0162 (0.000) –0.0005 (0.902) ⁄⁄⁄ ⁄⁄⁄ Constant 7.6829 (0.000) 9.9713 (0.000) Industry Yes Yes Region Yes Yes Obs. 2173 2299 Adj-R 0.62 0.19 The dependent variable is the natural logarithm of audit fee. ROA is defined as the ratio of net income to total assets. Crisis is a dummy variable, equal to one if it is the crisis period and zero otherwise. Size is the natural logarithm of total assets. Lev is the ratio of debts to total assets. Liquidity equals current assets divided by cur- rent liabilities. Diversify is the segment number. Big4 is a dummy variable, equal to one if a firm employs a Big Four auditor and zero otherwise. Age is the number of years a firm has been listed. Industry represents the industry dummy variables. Region represents the region dummy variables. We winsorize the variables ROA, Lev, and Liquidity at the top and bottom 0.5% to mitigate the effect of outliers. One, two, or three aster- isks denote significance at the 10%, 5% and 1% levels, respectively. Table 2 reports the Pearson correlation coefficients among the variables. It shows that audit fees are higher for large and more complex firms. The ratio of current assets to current liabilities is negatively correlated with audit fees. Finally, the Big Four charge more for their auditing services. 5. Empirical analysis 5.1. The audit fee risk premium The first two columns in Table 3 report the regression results for model (1). We find that the coefficient of Crisis is 0.0501, significant at the 1% level, suggesting that audit fees increased after the financial crisis. However, as Crisis is a dummy variable, it might represent factors other than risk, so we employ the interaction item ROACrisis to examine the association between audit fees and incremental risk at the time of the crisis. We find that the coefficient of ROACrisis is –0.3422, significant at the 5% level. The result indicates that when firms face higher risk under the crisis, accounting firms charge more due to rising fixed and risk costs; that is, audit fees incur a risk pre- mium. The regression also shows that audit fee correlates positively with firm size (Size), leverage (Lev), segment number (Diversify) and age (Age), but negatively with current assets (Liquidity). The Big Four charge higher fees than the non-Big Four. 5.2. The difference between export and non-export firms To compare the risk premium of audit fee between export and non-export firms, we cal- culate the ratio of export output to total output for each industry using the China 54 Zhang and Huang Table 4. Results of the sub-group regression. Export Non-export Private Non-Big firms firms SOEs firms Big Four Four Variables (1) (2) (3) (4) (5) (6) ROA 0.2661 0.0421 –0.0171 0.2500 –0.8256 0.2753 (0.238) (0.840) (0.928) (0.748) (0.614) (0.568) ⁄⁄ ⁄⁄⁄ Crisis 0.0339 0.0342 0.0453 0.0310 –0.0818 0.0446 (0.255) (0.266) (0.046) (0.245) (0.589) (0.009) ⁄⁄ ⁄⁄ ROACrisis – –0.0092 –0.1421 –0.3419 –0.8070 –0.3042 ⁄⁄⁄ 0.7379 (0.004) (0.968) (0.542) (0.042) (0.670) (0.024) ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ Size 0.2362 0.2714 0.2813 0.1948 0.4641 0.2284 (0.000) (0.000) (0.000) (0.000) (0.000) (0.000) ⁄ ⁄⁄ ⁄⁄⁄ Lev 0.1114 0.1743 0.0422 0.1198 0.7726 0.1652 (0.164) (0.066) (0.605) (0.036) (0.188) (0.000) ⁄⁄⁄ Liquidity –0.0195 –0.0195 – – 0.0971 –0.0247 ⁄⁄⁄ ⁄⁄⁄ 0.0396 0.0305 (0.154) (0.136) (0.000) (0.003) (0.481) (0.000) ⁄⁄⁄ ⁄⁄ ⁄⁄ ⁄⁄ ⁄⁄⁄ Diversify 0.0349 0.0315 0.0209 0.0257 0.0567 0.0244 (0.006) (0.019) (0.020) (0.019) (0.210) (0.000) ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ Big4 0.8928 1.0555 0.9579 1.1080 (0.000) (0.000) (0.000) (0.000) ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ Age 0.0318 0.0172 0.0134 0.0273 0.0047 0.0162 (0.000) (0.000) (0.000) (0.000) (0.788) (0.000) ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ ⁄⁄ ⁄⁄⁄ Constant 7.5024 7.0650 6.8087 8.6402 3.0146 7.9174 (0.000) (0.000) (0.000) (0.000) (0.030) (0.000) Industry Yes Yes Yes Yes Yes Yes Region Yes Yes Yes Yes Yes Yes Obs. 638 698 2380 793 115 2058 Adj-R 0.61 0.62 0.66 0.55 0.54 0.44 F Test for Z Value = –2.02 Z Value =1.70 Z Value =–0.27 interaction (0.043) (0.089) (0.787) The dependent variable is the natural logarithm of audit fee. ROA is defined as the ratio of net income to total assets. Crisis is a dummy variable, equal to one if the fiscal year is 2008 and zero otherwise. Size is the natu- ral logarithm of total assets. Lev is the ratio of debts to total assets. Liquidity equals current assets divided by current liabilities. Diversify is the segment number. Big4 is a dummy variable, equal to one if a firm employs a Big Four auditor and zero otherwise. Age is the number of years a firm has been listed. Industry represents the industry dummy variables. Region represents the region dummy variables. We winsorize the variables ROA, Lev and Liquidity at the top and bottom 0.5% to mitigate the effect of outliers. P values are in parenthe- sis. One, two, or three asterisks denote significance at the 10%, 5% and 1% levels, respectively. Industrial Companies Database, and employ its median to divide the sample firms into two groups, export and non-export companies. We then run a regression for each group and the results are presented in columns (1) and (2) of Table 4. The number of observa- tions is reduced because the China Industrial Companies Database only covers manu- facturing firms, thus only industrial listed companies are included in the regression. We find that the coefficient of ROACrisis is significantly negative for export firms, but insignificant for non-export firms. We conduct an F test to compare the two interac- tion coefficients, and it is significant at the 5% level. The above finding suggests that the risk premium of audit fee is highly significant for export firms when they are seri- ously affected by the financial crisis, but is insignificant for non-export firms because they are less influenced during the crisis. The results for the control variables are similar to the previous regression. China Journal of Accounting Studies 55 5.3. The difference between SOEs and private firms We further investigate how corporate ownership influences the risk premium of audit fee. Specifically, we divide the sample by SOEs and private firms and run sub-group regressions. Columns (3) and (4) in Table 4 display the results. The coefficient of Crisis is significantly positive in the SOE regression, indicating that the audit fee for SOEs increases after the crisis. However, as the variable Crisis does not represent firm risk precisely, we cannot be sure whether the increase in SOEs’ audit fees is due to higher risk under the crisis or to other factors. For example, the managers of SOEs may have a low incentive to bargain with accounting firms and thus SOEs’ audit fees may increase gradually. Thus, we examine the interaction item ROACrisis and find that it generates an insignificant coefficient in column (3), but a significantly negative coeffi- cient in column (4). Further, the F test of the two interaction items is significant at the 10% level. The result indicates that state ownership provides an implicit bailout guaran- tee to SOEs, thus mitigating the risk premium on SOEs’ audit fees during the crisis. However, as the possibility of bailout is lower for private firms, accounting firms charge more when private firms’ risk increases under the crisis. The control variables generate qualitatively similar results. 5.4. The difference between Big Four and non-Big Four audited firms Finally, we examine the effect of auditors on the relationship between firm risk and audit fees. The last two columns in Table 4 present the sub-sample regression results for Big Four versus non-Big Four. In column (5), the coefficient of the interaction item ROACrisis is insignificant for firms audited by Big Four, but it generates a signifi- cantly negative coefficient for non-Big Four firms in column (6). An F test to compare the two interaction items is insignificant, which shows that the risk premium on audit fee is concentrated in firms audited by non-Big Four. The results for the control vari- ables are unchanged. 6. Further analysis The above analysis shows that audit fees increase with firm risk under the crisis and it provides evidence for the risk premium of audit fee. A further interesting question is how the risk premium is generated. Our argument suggests that when firms face higher uncertainty, auditors might implement more audit procedures and request higher lawsuit compensation, leading to higher audit fees. Next, we examine how firm risk is associ- ated with auditors’ time and attention to lawsuit risk. 6.1. Audit time We construct the following model to investigate whether auditors input additional effort when firm risk increases: Time ¼ b þ b ROA þ b Size þ b Lev þ b Liquidity þ b Diversify þ b Age 0 1 2 3 4 5 6 þ Industry þ e ð2Þ Time denotes audit time. As listed companies do not publicly disclose information about audit time, we use the period between the fiscal year end and the auditor’s report 56 Zhang and Huang Table 5. Results of the audit time and opinion. Audit Time Audit Opinion Coefficient P Value Coefficient P Value Variables (1) (2) (3) (4) ⁄⁄⁄ ⁄⁄ ROA –21.1720 (0.000) –0.9034 (0.024) ⁄⁄⁄ Size –0.2043 (0.683) –0.5784 (0.000) ⁄⁄⁄ Lev 2.9782 (0.416) 2.0586 (0.000) ⁄⁄ Liquidity –0.1223 (0.810) –0.1647 (0.048) Diversify –0.1533 (0.754) 0.0093 (0.880) ⁄⁄⁄ ⁄⁄⁄ Age 0.8607 (0.000) 0.0641 (0.003) ⁄⁄⁄ ⁄⁄⁄ Constant 93.9277 (0.000) 9.7444 (0.000) Industry Yes Yes Obs. 1172 1088 Adj-R 0.08 0.37 The dependent variable for the audit time regression is Time, the period between the fiscal year end and the auditor’s report date. The dependent variable for the audit opinion regression is Opinion, equal to one if a firm receives a modified audit report, and zero otherwise. ROA is defined as the ratio of net income to total assets. Size is the natural logarithm of total assets. Lev is the ratio of debts to total assets. Liquidity equals current assets divided by current liabilities. Diversify is the segment number. Age is the number of years a firm has been listed. Industry represents the industry dummy variables. We winsorize the variables ROA, Lev and Liquidity at the top and bottom 0.5% to mitigate the effect of outliers. One, two, or three asterisks denote sig- nificance at the 10%, 5% and 1% levels, respectively. date as a proxy. The other variables are defined as before. The first two columns in Table 5 report the regression result for model (2), based on the 2008 data. We find that the coefficient of our risk measure, ROA,is –21.1720 and significant at the 1% level. The result indicates that accounting firms widen their audit scope and carry out addi- tional processes for risky firms, which prolongs the auditing period. The regression also shows that accounting firms spend longer when auditing older firms. 6.2. Attention to lawsuit risk High risk may increase auditors’ concerns over potential lawsuits, thus generating higher audit fees. We employ the following logistic model to analyze this: Opinion ¼ c þ c ROA þ c Size þ c Lev þ c Liquidity þ c Diversify þ c Age 0 1 2 3 4 5 6 þ Industry þ e ð3Þ Opinion is the audit opinion variable, which equals one if a firm receives a modified audit report, and zero otherwise. The definitions of the other variables are the same as before. We expect that auditors are more likely to issue modified opinions to risky firms if high uncertainty increases auditors’ concerns over potential lawsuits. Columns (3) and (4) in Table 5 present the regression results for model (3) using the 2008 data. The coefficient of ROA is –0.9034 and significant at the 5% level, suggesting that risky firms are more likely to receive a modified audit opinion. The result confirms that high firm risk increases auditors’ concern to a potential lawsuit, resulting in a higher possi- bility of issuing a modified opinion. The results for the other variables show that modi- fied audit opinion negatively correlates with firm size and current assets, but positively correlates with firm leverage and age. Finally, the sample size is slightly reduced because the probit regression deletes any observations with perfect prediction. China Journal of Accounting Studies 57 7. Robust analysis 7.1. The lagged effect of the crisis As there may be a lag between the happening of the financial crisis and its effects, we also employ 2009 as the crisis period. Specifically, we use 2007 and 2009 listed com- pany data, and re-run the model (1) regression. The result is presented in the last two columns of Table 3. We find that the interaction item ROACrisis still generates a sig- nificantly negative coefficient. The result provides further evidence for the risk premium of audit fee, even when controlling for the lagged effect of the financial crisis. 7.2. The increase in audit fees We adjust audit fees by the annual inflation rate in the analysis, because audit fees might increase with time. To further rule out this time effect, we use the listed company data from 2004 to 2007 and re-run the model (1) regression for each successive two-year Table 6. Results of the ‘other years’ analysis. 2006 and 2007 2005 and 2006 2004 and 2005 Variables (1) (2) (3) ⁄⁄ ⁄⁄ ROA 0.0154 –0.1781 –0.2086 (0.856) (0.045) (0.038) ⁄⁄ ⁄⁄⁄ ⁄⁄ Nextyear –0.0392 0.0593 0.0365 (0.033) (0.001) (0.038) ROANextyear 0.1267 –0.0129 0.0741 (0.402) (0.907) (0.529) ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ Size 0.2941 0.3260 0.3165 (0.000) (0.000) (0.000) ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ Lev 0.1394 0.0835 0.0796 (0.000) (0.000) (0.000) ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ Liquidity –0.0124 –0.0117 –0.0120 (0.001) (0.002) (0.001) ⁄⁄ Diversify 0.0148 0.0056 0.0065 (0.040) (0.436) (0.353) ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ Big4 0.9218 0.7349 0.5644 (0.000) (0.000) (0.000) ⁄⁄⁄ ⁄⁄⁄ ⁄⁄ Age 0.0156 0.0155 0.0076 (0.000) (0.000) (0.030) ⁄⁄⁄ ⁄⁄⁄ ⁄⁄⁄ Constant 6.7153 6.0371 6.2358 (0.000) (0.000) (0.000) Industry Yes Yes Yes Region Yes Yes Yes Obs. 2100 2212 2183 Adj-R 0.62 0.59 0.53 This table presents the regression results for the successive two-year comparison between audit fees from 2004 to 2007. The dependent variable is the natural logarithm of audit fee. ROA is defined as the ratio of net income to total assets. Nextyear is a dummy variable, denoting the following year for each two-year period. Size is the natural logarithm of total assets. Lev is the ratio of debts to total assets. Liquidity equals current assets divided by current liabilities. Diversify is the segment number. Big4 is a dummy variable, equal to one if a firm employs a Big Four auditor and zero otherwise. Age is the number of years a firm has been listed. Industry represents the industry dummy variables. Region represents the region dummy variables. We winsor- ize the variables ROA, Lev and Liquidity at the top and bottom 0.5% to mitigate the effect of outliers. The change in the number of observations is due to differences in the number of listed companies and changes in companies’ disclosure of audit fees across years. P values are in parenthesis. One, two, or three asterisks denote significance at the 10%, 5% and 1% levels, respectively. 58 Zhang and Huang period. The regression result is reported in Table 6. Here, the variable Nextyear denotes the following year; for example, Nextyear equals one for 2005 when running the regres- sion of the year 2004 and 2005. The coefficient of the interaction item ROANextyear is insignificant in all of the regressions, suggesting that our conclusion is free from the time-series increase in audit fees. 7.3. Endogeneity We use the 2008 financial crisis as an exogenous event to mitigate the endogeneity problem and analyze how audit fees relate to incremental firm risk when firms face a shock. To further resolve endogeneity in the analysis, we employ a Heckman two-stage regression (1979). First, we run a probit model on firm risk as follows: X X Risk ¼ d þ d Size þ d Lev þ d Diversify þ d Age þ Industry þ Year þ e ð4Þ 0 1 2 3 4 where Risk is an indicator variable, equal to one if the firm’s ROA is in the bottom quartile of sample firms in the same industry and year, and zero otherwise. The regres- sion adds a year dummy to control for year effects. The definition of other variables is the same as before. Table 7. Results of the Heckman regression. First-stage Second-stage Coefficient P Value Coefficient P Value (1) (2) (3) (4) ROA 0.1645 (0.145) ⁄⁄⁄ Crisis 0.0554 (0.002) ROACrisis –0.2602 (0.070) ⁄⁄⁄ λ 1.5480 (0.000) ⁄⁄⁄ Size –0.2128 (0.000) 0.0076 (0.821) ⁄⁄⁄ ⁄⁄⁄ Lev 1.1260 (0.000) 1.2700 (0.000) ⁄⁄⁄ Liquidity –0.0320 (0.000) ⁄⁄ ⁄⁄⁄ Diversify 0.0545 (0.025) 0.0883 (0.000) ⁄⁄⁄ Big4 0.9943 (0.000) ⁄⁄ ⁄⁄⁄ Age 0.0214 (0.018) 0.0406 (0.000) ⁄⁄⁄ ⁄⁄⁄ Constant 3.1414 (0.000) 9.8736 (0.000) Industry Yes Yes Year Yes No Region No Yes Obs. 2160 2160 Adj-R 0.06 0.62 The first-stage result is reported in columns (1) and (2). The dependent variable is the dummy variable Risk, equal to one if the firm’s ROA is in the bottom quartile of sample firms in the same industry and year, and zero otherwise. Columns (3) and (4) report the second-stage result. The dependent variable is the natural loga- rithm of audit fee. ROA is defined as the ratio of net income to total assets. Crisis is a dummy variable, equal to one if the fiscal year is 2008 and zero otherwise. λ is Mill’s Ratio, calculated in the first-stage regression. Size is the natural logarithm of total assets. Lev is the ratio of debts to total assets. Liquidity equals current assets divided by current liabilities. Diversify is the segment number. Big4 is a dummy variable, equal to one if a firm employs a Big Four auditor and zero otherwise. Age is the number of years a firm has been listed. Industry represents the industry dummy variables. Year represents the year dummy variables. Region repre- sents the region dummy variables. We winsorize the variables ROA, Lev and Liquidity at the top and bottom 0.5% to mitigate the effect of outliers. The reduction in the sample size is because the probit regression deletes any observations with perfect prediction. One, two, or three asterisks denote significance at the 10%, 5% and 1% levels, respectively. China Journal of Accounting Studies 59 The regression results for model (4) are presented in columns (1) and (2) of Table 7. We find that the coefficient of Size is significantly negative, suggesting that large firms face lower uncertainty. Firm risk is higher for highly leveraged firms, and the coefficient of Diversify shows that firm risk also increases with operational complexity. Finally, older firms have higher risk. Based on the first-stage regression, we calculate a Mill’s Ratio (λ) and employ it in the second-stage regression. The result is reported in columns (3) and (4) of Table 7. The interaction item ROACrisis still generates a significantly negative coefficient. The regression provides further evidence that audit fees increase with firm risk under the cri- sis and there is a risk premium on audit fees. 7.4. Further analysis of auditor size The previous analysis shows that the risk premium of audit fee is insignificant for Big Four audited firms. However, this result might be caused by only a few observations in the Big Four regression because the Big Four have a low market share among Chinese listed companies. To rule out this alternative explanation, we classify our sample into ‘Big Ten’ and non-‘Big Ten’ audited firms according to accounting firms’ revenue, and re-run the regression. We find that the coefficient of the interaction item ROACrisis is insignifi- cant for Big Ten audited firms, but attracts a significantly negative coefficient for non-Big Ten audited firms. We do not report the results to conserve space, but they are available upon request. The result further verifies that the risk premium on audit fee is concentrated in firms audited by small auditors. 7.5. Alternative risk measure As a robustness test we employ another performance variable, return on sales (ROS), as the measure of risk. The regression shows that the coefficient of the interaction item (ROSCrisis) is still significantly negative. Again, in the interest of space, we do not present the results, but they are available from the authors upon request. The analysis further supports our conclusion. That is, accounting firms charge higher audit fees to firms with higher risk under the crisis. 8. Conclusion We explore the relationship between firm risk and audit fees using the 2008 financial crisis as an exogenous event. We find that audit fees increase with firm risk under the crisis, suggesting that audit fees incur a risk premium. Further analysis reveals that the risk premium on audit fee is particularly high for export firms, which were seriously shocked by the crisis. The comparison shows that accounting firms do not charge more to SOEs with higher risk, due to the government’s implicit bailout guarantee, but the audit fees of private firms significantly increase with risk under the crisis. Finally, the risk premium of audit fee is only found for firms audited by smaller, non-Big Four auditors. By investigating firms’ audit fees under the crisis, this research improves our under- standing of how firm risk is associated with audit pricing by controlling the endogeneity issue. Our analysis clarifies the controversy over the risk premium of audit fee in the extant literature. Further, our research shows that the 2008 financial crisis had a notable 60 Zhang and Huang effect on firm auditing. For example, accounting firms expended more effort and were more concerned about potential lawsuits following the crisis. Finally, an implication of our research is that although most companies carried out cost-cutting projects under the crisis, accounting firms should respond by implementing stricter procedures and increas- ing the scope of their audits to avoid audit failure. Acknowledgements The authors acknowledge the financial support of the National Natural Science Foundation of China (71102136, 71272008, 71202044), the Key Research Institute Research Project of the Ministry of Education (11JJD790008), the Young Scholar Research Project of the Ministry of Education (11YJC790284, 10YJC790094), the Innovation Program of the Shanghai Municipal Education Commission and the 085 Project for Shanghai Institute of Foreign Trade. We thank anonymous referees and the editors for their insightful comments. Notes 1. The risk of lawsuit is indeed low in China compared with other developed countries, but Chen, Li, Rui, and Xia (2009) point out that the litigation right of investors is gradually being recognized and protected as China’s legal system develops, which increases the risk of lawsuit for accounting firms. 2. In November 2008, China’s export market experienced its first negative growth since entering the WTO. 3. For example, the domestic accounting firms that are partners of the Big Four all had a gov- ernment background when the Big Four entered the China audit market in the 1990s. The Chinese Institute of Certified Public Accountants (CICPA) has not undertaken an annual inspection of the Big Four for a long time. 4. The mean of Crisis does not equal 0.5 because some companies do not disclose their audit fees and we require that firm observations should be at least two years after their IPOs. 5. Because the analysis is based on two-year firm data, we admit that the test statistics could be overstated due to residual correlations, thus the significance levels should be interpreted with caution. 6. We compare the deleted and undeleted firms on variables such as ROA, Size, Lev and Liquid- ity. The results show that the two groups of firms are quite similar, except in firm size: manu- facturing firms are usually larger than non-manufacturing firms. References Abbott, L., Parker, S., Paters, G., & Raghunandan, K. (2003). The association between audit com- mittee characteristics and audit fees. Auditing: A Journal of Practice and Theory, 22,17–32. Anderson, T., & Zeghal, D. (1994). The pricing of audit services: Further evidence from the Canadian market. Accounting and Business Research, 24, 195–207. Beatty, R. (1993). The economic determinants of auditor compensation in the initial public offer- ings market. Journal of Accounting Research, 31, 294–302. Chen, X., Li, M., Rui, M., & Xia, L. (2009). Judiciary independence and the enforcement of investor protection laws: Market responses to the ‘1/15’ notice of the supreme people’s court of China. China Economic Quarterly, 9,1–28. Choi, J., Kim, J., Liu, X., & Simunic, D. A. (2008). Audit pricing, legal liability regimes, and Big 4 premiums: Theory and cross-country evidence. Contemporary Accounting Research, 25,55–99. Chung, D., & Lindsay, W. D. (1988). The pricing of audit services: The Canadian perspective. Contemporary Accounting Research, 5,19–46. DeAngelo, L. E. (1981). Auditor size and audit quality. Journal of Accounting and Economics, 3, 183–199. DeFond, M. L., Francis, F. R., & Wong, T. J. (2000). Auditor industry specialization and market segmentation: Evidence from Hong Kong. Auditing: A Journal of Practice and Theory, 19, 49–66. China Journal of Accounting Studies 61 DeFond, M. L., Wong, T. J., & Li, S. (2000). The impact of improved auditor independence on audit market concentration in China. Journal of Accounting and Economics, 24, 269–305. Dye, R. A. (1993). Auditing standards, legal liabilities and auditor wealth. Journal of Political Economy, 101, 877–914. Faccio, M., McConnell, J., & Masulis, R. (2006). Political connections and corporate bailouts. Journal of Finance, 61, 2597–2635. Firth, M. (1985). An analysis of audit fees and their determinants in New Zealand. Auditing: A Journal of Practice and Theory, 4,23–37. Francis, J. (1984). The effect of audit firm size on audit prices. Journal of Accounting and Eco- nomics, 6, 133–151. Gul, F. A., & Tsui, J. S. L. (1998). A test of the free cash flow and debt monitoring hypothesis: Evidence from audit pricing. Journal of Accounting and Economics, 24, 219–237. Guo, Z. (2011). International Big Four accounting firms and high auditing quality: Evidence from China’s securities market. Audit Research, 165,98–107. Heckman, J. (1979). Sample selection bias as a specification error. Econometrica, 47, 153–162. Huang, H. (2009). The number of bankruptcy firms arrives at 4900 in Guangdong province under the financial crisis. www.china.com.cn. Kornai, J. (1988). Individual freedom and reform of the socialist economy. European Economic Review, 32, 233–267. Kornai, J. (1993). The evolution of financial discipline under the postsocialist system. Kyklos, 46, 315–336. Li, S., & Wu, X. (2004). The regulation signal, risk estimation and audit pricing: Evidence from auditor change. Audit Research, 123,13–18. Liu, B., Ye, J., & Liao, Y. (2003). The determinants of the audit fees of Chinese listed companies. Audit Research, 111,44–47. Liu, F., & Xu, F. (2002). Risk based auditing, litigation risk and auditing quality. Accounting Research, 172,21–27. Liu, F., & Zhou, F. (2007a). Does size really matter? A test from the perspective of accounting conservatism. Accounting Research, 233,79–87. Liu, J., & Zhou, R. (2007b). The regulatory risk and audit pricing of China’s listed commercial banks. Audit Research, 139,56–63. Liu, S., Sun, P., & Liu, N. (2003). Ultimate owner, ownership structure and firm performance. Economic Research Journal, 38,51–62. Seetharaman, A., Gul, F. A., & Lynn, S. G. (2002). Litigation risk and audit fees: Evidence from UK firms cross-listed on US markets. Journal of Accounting and Economics, 33,91–115. Simunic, D. A. (1980). The pricing of audit services: Theory and evidence. Journal of Accounting Research, 18, 161–190. Simunic, D. A., & Stein, M. T. (1996). The impact of litigation risk on audit pricing: A review of the economics and the evidence. Auditing: A Journal of Practice and Theory, 15,119–133. Wu, L. (2003). The influence of earnings management on audit fees. Accounting Research, 194, 39–44. Zhang, J., Chen, Y., & Wu, X. (2005). The effect of risk on the audit fees of Chinese listed com- panies. Audit Research, 126,34–38. Zhu, K., Zhao, X., & Sun, H. (2009). Accounting standard reform, information accuracy and value relevance. Management World, 5,47–54. Zhu, X., & Yu, Q. (2004). The determinant of audit fee: An empirical analysis. China Accounting Review, 2, 393–408.
China Journal of Accounting Studies – Taylor & Francis
Published: Mar 1, 2013
Keywords: audit fee; financial crisis; firm risk; risk premium
You can share this free article with as many people as you like with the url below! We hope you enjoy this feature!
Read and print from thousands of top scholarly journals.
Already have an account? Log in
Bookmark this article. You can see your Bookmarks on your DeepDyve Library.
To save an article, log in first, or sign up for a DeepDyve account if you don’t already have one.
Copy and paste the desired citation format or use the link below to download a file formatted for EndNote
Access the full text.
Sign up today, get DeepDyve free for 14 days.
All DeepDyve websites use cookies to improve your online experience. They were placed on your computer when you launched this website. You can change your cookie settings through your browser.