The Statistical Analysis of Audit Fees: Price Game between Supply Party and Demand Party in Chinese Audit Market

摘要

Using the 2007 data from Shanghai and Shenzhen Stock Exchanges, this article tests the price game between supply party and demand party in Chinese audit market after controlling other factors that affect audit fees. We find both bargaining powers of the supply and demand party have significant effects on audit fees when only one party’s bargaining power is considered. But when these two powers counter with each other, the latter is conquered by the former, that is to say, the auditors’ good reputation still has a significant effect on audit fees, while the clients lose the bargaining power and could not lower audit fees.