Work

The Power of Reputation: Award‐winning CEOs and Audit Pricing

Year: 2025

Type: article

Abstract: This study investigates how CEO reputation influences firms’ audit fees. Using prestigious business awards to measure positive shocks to CEO reputation, empirical evidence reveals that firms with nationally recognized CEOs exhibit significant reductions in external auditing fees compared to peer firms. The results hold for various robustness checks. Moreover, we find more pronounced negative relations between CEO reputation and audit fees for firms with weaker internal governance, CEOs who win more prestigious awards, firms with highly paid CEOs, and firms with greater analyst followings. Finally, we find that CEO reputation affects client risk proxied by return volatility, accounting quality, and internal control weakness, which in turn influences audit fees. Collectively, our results show that CEO reputation affects audit risk and pricing.

Source: Abacus

DOI: 10.1111/abac.70029

Authors: Qiong Ji, Xiaofeng Quan, Lida Zhang, Yao Zhang

Institutions: Xi’an Jiaotong-Liverpool University, Soochow University, Xi'an University of Finance and Economics, Tongji University

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: bronze

Funder: National Natural Science Foundation of China

Award: G165079257