Does the resignation of an independent director affect audit fees? An empirical study based on Chinese A-share listed companies

Liu, Xiaomei; Li, Bin; Zhang, Shuai; Yang, Zhenhe

doi:10.1016/j.irfa.2024.103075

Cited by 2 publications

(1 citation statement)

References 19 publications

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“…However, in recent years, the phenomenon of resignations among independent directors has drawn widespread public attention and academic discussion, especially when such resignations occur following legal disputes or corporate crises. This behavior is viewed as a potential key indicator affecting corporate governance and market confidence [1][2][3][4]. Consequently, the primary question of this study is to explore whether the abnormal resignation of independent directors influences the professional judgment of auditors and to attempt to decipher the specific pathways and mechanisms of this influence.…”

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confidence: 99%

Do the unusual resignations of independent directors affect auditors’ professional judgment?

Zhang,

2024

PLoS ONE

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In Kangmei’s first trial judgment, where the independent directors faced significant joint and several liabilities, it triggered a "wave" of resignations among independent directors of listed companies. Auditors auditing financial reports of these companies might consider this a significant signal, raising the question: does this signal influence their professional judgment? The study examines the relationship between the resignation of independent directors and auditors’ professional judgment in A-share listed companies, following Kangmei’s initial trial. This examination is conducted across three dimensions: audit pricing, audit input, and audit opinion.The findings indicate that the unusual resignations of independent directors prompt uditors to pay increased attention to the risk of material misstatements by clients, primarily reflected in audit pricing. However, these resignations do not significantly impact audit input or the judgment of audit opinions. Furthermore, this research enriches the existing literature on audit pricing and the role of independent directors, while also unveiling the specific pathways through which the departure of independent directors impacts auditors’ professional judgment.

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Section: Introductionmentioning

confidence: 99%

Do the unusual resignations of independent directors affect auditors’ professional judgment?

Zhang,

2024

PLoS ONE

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Do Investment Funds Audited by the Big Four Firms Exhibit Different Performances? Evidence from Brazil

Malaquias,

Borges Junior,

Zambra

2024

JRFM

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Investment funds manage a portfolio composed of financial instruments; therefore, their accounting reports should undergo a careful process of preparation and auditing. The main purpose of this study is to analyze the effect of being audited by a Big Four audit company on funds’ risk-adjusted performance. The database is composed of equity funds from the Brazilian financial market, with daily returns spanning from January 2005 to March 2023. The funds’ performance was measured based on three indicators, including the Sharpe Ratio and Jensen’s Alpha. Fama and MacBeth regressions were used to test the hypotheses. The main findings indicate that the benefits of audit quality also include a positive effect on the risk-adjusted performance of investment funds, as the coefficient of the variable “Big Four” was positive and significant based on the proxies for risk-adjusted performance. This study advances this area of research by demonstrating the effects of the type of audit on the risk-adjusted performance indicators of investment funds.

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Does the resignation of an independent director affect audit fees? An empirical study based on Chinese A-share listed companies

Cited by 2 publications

References 19 publications

Do the unusual resignations of independent directors affect auditors’ professional judgment?

Do the unusual resignations of independent directors affect auditors’ professional judgment?

Do Investment Funds Audited by the Big Four Firms Exhibit Different Performances? Evidence from Brazil

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