Does M&A Goodwill Affect Audit Fees

JOURNAL OF CONTEMPORARY FINANCE AND ECONOMICS ›› 2021, Vol. 0 ›› Issue (1): 136-147.

Does M&A Goodwill Affect Audit Fees

JIANG Yaoming¹, YANG Lijuan^1,2

1. Jiangxi University of Finance and Economics, Nanchang 330013;
2. Nanchang Central Sub-branch The People's Bank of China, Nanchang 330008, China

Online:2021-01-15 Published:2021-09-29
About author:Jiang Yaoming, Ph.D, professor and doctoral supervisor at Jiangxi University of Finance and Economics, mainly engaged in research of accounting information disclosure and supervision in securities market; Yang Lijuan (corresponding author), doctoral candidate at Jiangxi University of Finance and Economics, and senior staff member of Nanchang Central Sub-branch of the People's Bank of China, mainly engaged in research of accounting information disclosure and supervision in securities market, Email: yljdyx18@126.com.

Abstract

Abstract: At the present capital market, mergers and acquisitions are constantly emerging, the potential devaluation risks due to over estimation of M&A goodwill have not only brought about tremendous shakes in the capital market, but also affected the audit risks of auditors and the auditing fee on M&A enterprises. By making use of the data of Chinese A-share listed firms from 2007 to 2017, this paper investigates the influence of goodwill on auditing fees. It is found that there is a significant positive correlation between the M&A goodwill and auditing fees of the listed companies, in which the action mechanism is that M&A goodwill has increased information asymmetry and agency costs of the listed companies, and in turn increased auditing fees. The results of further study indicate that the fine internal control and external institutional environment can ease the positive correlation between M&A goodwill and auditing fees.

Key words: M&A goodwill, audit fees, information asymmetry, agency cost

JIANG Yaoming, YANG Lijuan. Does M&A Goodwill Affect Audit Fees[J]. JOURNAL OF CONTEMPORARY FINANCE AND ECONOMICS, 2021, 0(1): 136-147.

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