An Empirical Study About Audit Subject And Object Size On The Audit Fee Premium

Audit fee is an important factor in Audit market. Its level plays an essential role in the activity of independence and audit quality. The audit fee of"International Big Four"accounting firms is higher than native ones in our auditing markets. That "International Big Four" charge audit fee premium in our audit market. The audit fee premium of "International Big Four" come from its strong scale or from a good "brand reputation" mean? "International Big Four" charge audit fee premium from all of our clients,or from only part of our clients ?Therefore,this article from the audit relationship between subject and object size ,probe the issue premium of the accounting firm's audit fees.In this paper,we discussed the production of audit fee,the determination of the standard audit fee,and the concept of premium audit fees. When the firm's audit fees charged higher than the maximum number of established standards,we will identify the audit fees charged by premium.Then,from the economies of scale,technological progress,bargaining power,product differentiation,industry expertise,we analysis the sources of audit fee premium. Next,from the both positive and negative relationship between the audit subject,object the size of the premium cost of the audit.In the above theoretical analysis,on the basis of listed firm in Shanghai and Shenzhen in China in 2007and 2008 for the study sample,using modified Simunnic audit fee model to test different sizes of firms of different sizes charge a premium audit fee situation. First of all,"International Big Four" as the research object,through empirical testing come: "International Big Four" of big clients,small clients are charged the audit fee premium. Which differs from the views alleged by Francis and Stokes in 1986,indicating that the charging mechanism of China's audit market and overseas market in some respects is different. Secondly,this "Local Big Five" as the object of study,an empirical test: "Local Big Five" on the big customers and small customers are charged the audit fee premium,but,far less than the audit fee premium of "International Big Four" ,shows that audit fees and firm size of the premium on the one hand,on the other hand,and the reputation of the firm. Once again,to "local small by" as the object of study,an empirical test: "By local small by" Instead of charging a premium audit fee,but some of the "cheap Showmanship" signs. Therefore,this article suggests the local accounting firm should enhance competitiveness in both size and reputation,while the Government should also strengthen the development of standard audit fees,norm the audit fees disclosure standard mechanism,to suppress the phenomenon of the audit fee premium.