Research on Corporate Social Responsibility and Audit Fees

Abstract

Corporate social responsibility (CSR) is a heterogeneous activity with differentiated cost inputs among different companies. With the increasing attention of the general public to CSR in recent years, numerous scholars have conducted research on this topic. Existing literature has confirmed that CSR may have an impact on internal controls of companies, thereby further affecting their operations and risks. The operation and risk profile of a company, in turn, influences the audit fees it pays. The existing literature mainly categorizes factors influencing audit fees into company characteristics and accounting firm characteristics, without considering the impact of cultural and ethical factors such as corporate social responsibility. To address this gap, this study empirically analyzes the relationship between CSR and audit fees. The research utilizes a sample of 1,100 eligible A-share listed companies from the Shanghai and Shenzhen stock markets, spanning five consecutive years. By incorporating dummy variables for year and industry, multiple linear regression models are employed for the analysis. The findings demonstrate a significant and statistically meaningful impact of CSR on audit fees. Companies with a stronger sense of social responsibility tend to pay lower audit fees. Moreover, companies with higher CSR awareness exhibit a reduced likelihood of incurring abnormal audit fees. This study contributes to the development of audit pricing theory and encourages companies to fulfill their social responsibilities.