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Employee quality and audit fee: evidence from China
Author(s) -
Li Xing,
Chen Xia,
Qi Baolei,
Tian Gaoliang
Publication year - 2020
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/acfi.12664
Subject(s) - audit , quality audit , business , accounting , quality (philosophy) , audit evidence , joint audit , china , internal audit , philosophy , epistemology , political science , law
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.