Abstract: A sound bankruptcy system is an important manifestation of the rule of law in the business environment. Taking the non-financial listed companies on the A-share market in China from 2016 to 2022 as samples, this paper investigates the impact of bankruptcy court establishment on audit fees. The findings show that the establishment of bankruptcy courts will increase audit fees. The mechanism analysis reveals that the establishment of bankruptcy courts increases the number of bankruptcy cases, enhances media attention, and thus increases the reputation and litigation risks of auditors, resulting in higher audit fees charged by auditors. The heterogeneity analysis reveals that when the risk of corporate bankruptcy is high, the risk sensitivity of accounting firms is high, and accounting firms have relatively strong bargaining power, the establishment of bankruptcy courts has a stronger effect on the increasing of audit fees. Therefore, it is necessary to continuously deepen the reform of the bankruptcy judicial system and establish more bankruptcy courts nationwide. When making audit decisions, auditors should take into account whether the local bankruptcy court has been established.

Key words: bankruptcy courts, audit fees, bankruptcy cases, media attention