Research On The Influence Of Regional Integrity Level On Audit Fees

People cannot stand without trust,and businesses cannot thrive without trust.Integrity is not only the foundation of an individual’s foothold in society,but also the cornerstone of the long-term survival and development of an enterprise.As an intangible commercial asset,honest companies are more likely to gain the trust of traders,and thus promote the smooth completion of various business cooperation;while untrustworthy companies will greatly increase transaction costs and reduce economic benefits.In the context of auditing,whether the audited enterprise is trustworthy and can truthfully disclose its financial status will directly affect the auditor’s resource input and output in the auditing process,which in turn affects the pricing of audit fees.In previous researches,most scholars only focus on the role of enterprise characteristics and firm characteristics on audit fees,and less attention is paid to the informal institutional influence of the integrity environment of the location of the audited entity.In fact,although abiding by integrity is an individual behavior,and there are differences in the level of integrity among people in the same area,due to the existence of the cohesion effect and the solidification effect,people will be based on the overall integrity impression of the location of the social group.Judging the trustworthiness of each subject in the region,it is generally believed that in regions with a high level of integrity,the public will pay more attention to abide by the code of conduct of honesty and trustworthiness,and are more trustworthy.Therefore,theoretically,there is a close correlation between regional integrity levels and audit fees.Based on this,this paper attempts to analyze its impact on audit fees from the perspective of regional integrity environment.This paper adopts the method of combining literature research and empirical research to analyze the influence of regional integrity level on audit fees.First of all,this paper summarizes the domestic and foreign literatures on the two major research fields of regional integrity economic effect and audit fees,and demonstrates the mechanism of regional integrity level affecting audit fees from a theoretical point of view.Then in the empirical part,based on the 17,068 sample data of A-share listed companies from 2008 to 2018,this paper uses the proportion of fraud cases to measure the regional integrity level,empirically tests the impact of regional integrity level on audit fees,and further explores.The heterogeneity of the influence of regional integrity on audit fees under different legal environments and marketization levels is analyzed.Finally,two influence paths of regional integrity levels on audit fees are analyzed.The research conclusions mainly show that:(1)The lower the integrity level of the listed company,the higher the audit fee.(2)The better the legal environment and the higher the level of marketization where the listed company is located,the more obvious the effect of the low-integrity environment leading to the increase of audit fees,that is,there is a complementary relationship between the legal system,the market system and social integrity.(3)A low-integrity social environment will have an impact on audit fees by reducing the quality of corporate earnings and increasing the level of audit resource input.On the one hand,the research of this paper enriches the relevant literature on the influencing factors of audit fees and the economic effect of social integrity environment,and deepens the understanding of the relationship between regional cultural characteristics and audit fees;on the other hand,through research in different legal environments and marketization The heterogeneity of the influence of honesty atmosphere on audit fees in different regions verifies that there is a complementary relationship between the legal system,the market system and the informal system represented by social honesty.At the same time,this paper also provides an empirical basis for my country to actively strengthen the construction of an honest society,enlightening enterprises to improve accounting information governance and honest management;auditors should strengthen the training of professional skills and professional ethics;the government should improve the loopholes in the legal system and create an atmosphere of honest society.