Research On The Impact Of Environmental Protection Tax On Audit Fees Of Heavily Polluting Enterprises

In the cause to solving the increasingly serious problem of "enterprises pollute,society pays" and accelerate the construction of Eco-Civilization,China implemented the Environmental Protection Tax Law in 2018,which levies environmental protection tax on enterprises in domestic areas.Most of the studies on the impact of environmental protection tax implementation have focused on the relationship of environmental protection tax on the financial performance,environmental performance,innovation level and capacity utilization of enterprises after its introduction,with little literature exploring the impact of environmental protection tax implementation on corporate audit fees.Most companies are under reputational pressure to disclose environmental information and the external disclosure of environmental information as a form of information disclosure can reduce information asymmetry in order to create a green image of their business,which can affect audit fees by influencing the allocation of audit resources.As a key target of environmental regulation,heavily polluting enterprises provide an experimental sample to examine the relationship of environmental protection tax from the perspective of audit fees.This paper therefore helps to broaden the boundaries of existing research on the economic consequences of environmental protection tax implementation through empirical research,explore the practical implications of environmental protection tax from the perspective of audit fees,explore the unintended effects of environmental protection tax,and provide an important reference for the contribution of capital markets.Using sample of A-share listed companies from 2014 to 2021,this research analysis the connection of the environmental protection tax on the audit fees of heavily polluting enterprises by constructing a double difference model and examining its mechanism of action.The researches show that the introduction of environmental protection tax significantly reduces the audit fees of heavily polluting enterprises,with the level of environmental information disclosure playing a part in mediating the effect.The results of the researches show that the relationship of the environmental protection tax with audit fees of heavily polluting enterprises is more significant in non-state companies than in state-owned companies.Besides the indirect effect of environmental protection taxes on audit fees through the level of environmental disclosure is moderated by the nature of property rights,specifically,the characteristic of property rights can moderate the relationship between environmental protection taxes and the level of environmental disclosure of heavily polluting firms in the mediating effects model.Compared with other studies,this research is innovative in two ways: on the one hand,it broadens the boundaries of existing research on the consequences of environmental protection tax,which ignored the possible unintended effects.This study extends the existing research from the expected effects to the unintended effects by exploring the relationship of the environmental protection tax on audit fees.On the other hand,by examining the exogenous variable of the new tax,the study provides insight into the exogenous factors affecting audit fees and uses the level of environmental information disclosure as a mediating variable to make a positive analysis of the mechanism of environmental regulation on audit fees.