Journal
ACCOUNTING AND FINANCE
Volume 60, Issue 5, Pages 4533-4566Publisher
WILEY
DOI: 10.1111/acfi.12664
Keywords
Audit effort; Audit fee; Audit risk; Employee quality; Financial reporting quality
Categories
Funding
- Chinese National Natural Science Foundation [71372163, 71672141]
- Chinese National Natural Science Foundation for Young Scholars [71502134]
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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.
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