The Empirical Research On Determinants Of Audit Fees

Independent audit has been playing a more and more important role in current capital market. Its essential role is as follows: to ensure capital market's function of resource distribution in gear, to safeguard the stability of the capital market, and even the stability of the whole social economy. The Price of audit service audit fees is determinate by not only demand and supply but also characteristic of audit market.Till now, studies on audit fees in China audit market are rarely few and all are normative research. Thus, we attempt to investigate the determinants of audit fees of the Chinese publicly held companies by empirical research. In 2001, China listed companies were required to disclosed their external audit fees for the first time. The pay to CPA went secret to open, which is the turning point of audit study. Based on the related literature and analysis of the demand and supply,s present situation of audit fees, this paper study the determinants of audit fee in Chinese A stock market, utilizing the annual report that has already revealed audit fees. At last this paper also puts forward some suggestion for normalization of audit fees behavior.After collecting the audit fees data of 959,932 sample companies from 2005,2006 annual report, we setup the multiple linear regression model of audit fees and relevant influence factor. The results are:1. It is found that the audit fee has positive correlation with the total assets, audit firms being"big four"or not, audit firms being"big ten"or not, the locate of listed corporation, the years of audit firms auditing listed corporation , listed corporation being"ST"or not;2. Here is ubiquitous low—balling in the actual Chinese audit market;3."big four"international accounting companies'audit fee and"big ten"national accounting companies'audit fee are more than other Local companies in the normal anniversary audit market;4. from the analysis of the article, we can see that the audit fee is mainly reflecting the actual cost of the audit or and some underlying risk like auditing risk is not included in the audit fee.The research on audit fees is only a means and its purpose is to prescribe the standards and disclosure of audit fees of listed companies in our country, which assist public to judge the financial condition of listed company by disclosing the relevant information about audit fees of listed company. In this way, Public investors,interests will be Protected sufficiently,and the resources of capital market will be allocated appropriately.