From Labels to Costs: The Impact of Corporate Renaming on Audit Fees
Tracks
Jade 2
Monday, July 1, 2024 |
4:20 PM - 4:45 PM |
Presenter
Mr Anthony Zhang
Phd Candidate/ Sessional Academic
Queensland University Of Technology
From Labels to Costs: The Impact of Corporate Renaming on Audit Fees
Abstract
This study investigates the association between corporate renaming behavior and its consequential impact on external audit fees. Utilizing a sample of listed Chinese companies from 2010 to 2019, our findings reveal a significant link between corporate renaming and increased audit fees in the subsequent year. Channel tests demonstrate that corporate renaming heightens the probability of financial restatements, incidents of financial reporting fraud, instances of earnings management, and is associated with an extended audit report lag. Cross-sectional analyses reveal that the link between corporate renaming and audit fees weakens for firms with strong governance. Companies in agriculture, construction, and real estate are more prone to elevated audit expenses after renaming. Additional tests show that corporate renaming correlates with managers' speculative behavior, such as lower future financial reporting quality, and an increased likelihood of auditor changes post-renaming. This research contributes to the audit fee literature by emphasizing the role of non-financial disclosure. It also highlights the challenges associated with corporate renaming and suggests potential regulatory adjustments or guidelines to address these issues.
Biography
Chair
Meng Guo
Doctoral Researcher
Aalto University
Discussant
Tom Scott
Professor
Auckland University Of Technology