MD&A readability, auditor characteristics, and audit fees
- 30 March 2021
- journal article
- research article
- Published by Wiley in Accounting & Finance
- Vol. 61 (4) , 5025-5050
Abstract
This paper investigates the relationship between audit fees and MD&A readability in China. We find that audit fees generally are higher when MD&A readability is lower. However, we find Big4 auditors and industry specialist auditors do not increase audit fees when MD&As are less readable while the other auditors do. We also find that it is the content unique to the reporting firm, rather than standard industry and market content in a MD&A that affects auditor fees. Our results also support that audit risk and audit efforts are two channels through which MD&A readability affects audit fees.Keywords
Funding Information
- National Natural Science Foundation of China (71672141)
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