Original Paper

China Accounting and Finance Review

, 15:2

First online:

Open Access This content is freely available online to anyone, anywhere at any time.

行业专家型独立董事、业务复杂度和审计费用

  • Ziye ZhaoAffiliated withSchool of Accountancy, Institute of Accounting and Finance, Shanghai University of Finance and Economics
  • , Jing ZhouAffiliated withSchool of Accountancy, Institute of Accounting and Finance, Shanghai University of Finance and Economics

Independent Directors with Industrial Expertise, Audit Complexity, and Audit Fee

Abstract

This paper aims to investigate the impact of independent directors with industrial expertise on the association between audit complexity and audit fee. About 50 per cent of China’s listed companies hire industry experts as independent directors. We find that the association between audit complexity and audit fee is stronger in firms that have independent directors with industrial expertise than in firms that do not. Furthermore, the impact of independent directors with industrial expertise is more pronounced for firms audited by the Big Four audit firms. The results suggest that the existence of independent directors with industrial expertise stimulates auditors’ awareness of the business risk of their clients, which may help auditors detect clients’ opportunistic behaviour in a complex business environment.

KeyWords

Industry Experts Independent Director Audit Fee Audit Complexity