Research on the Influence of Executive Incentive on Audit Fees of Listed Companies

Abstract

Since the listed companies were required to disclose audit fees in 2001, executive incentive is considered to be an important measure to improve corporate performance and reduce audit fees. There are different conclusions on the correlation between the two. In this paper, the mechanism of the impact of executive incentive on audit fees in listed companies is reviewed. It is found that under the influence of audit cost and risk premium, executive compensation and equity incentive have an impact on audit fees through audit risk. This paper selects A-share listed companies in Shanghai and Shenzhen of guotai'an database from 2013 to 2017 as research samples, and makes an empirical analysis on the relationship between executive incentive and audit fees. The results show that: there is a significant positive correlation between executive compensation level and audit fees; there is a significant negative correlation between executive equity incentive level and audit fees. According to this, this paper puts forward some suggestions, such as improving the company's salary system, improving the level of equity incentive, adopting a variety of equity incentive combinations, giving full play to the supervision role of internal governance institutions, etc., to provide reference suggestions for improving the incentive mechanism of senior executives and reducing audit fees.