Impact of Matching Relationship between M&A Auditors and Annual Report Auditors on Annual Report Audit Fees:Based on the Perspective of Audit Firm Network Centrality
Using China's A-share listed companies from 2007 to 2020 as research samples,we research the impact of the matching relationship be-tween M&A auditors and annual report auditors on audit fees.We find that when M&A auditors and annual report auditors exhibit similar network centrali-ty,the annual report auditors give the M&A company audit fee discount.Moreover,when the M&A auditor's network centrality surpasses that of the annual report auditor,the extent of audit discounts offered to the main acquirer is even greater.Conversely,when the M&A auditor's network centrality is weaker than that of the annual report auditor,the latter tends to increase audit premiums for the acquirer.Further research shows that the M&A auditor's reputa-tion,regional auditing capability,and window period for obtaining annual audit engagement are crucial factors which influence the impact of this matching relationship on annual report audit fees.The similar network centrality between M&A auditors and annual report auditors not only facilitates audit discounts for the main acquirer but also serves as a constraint on accrual-based earnings management.This paper provides empirical evidence to guide strategic deci-sions for acquirers employing M&A auditors and annual report auditors.
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