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