Insurance claims and audit quality: evidence from trade credit insurance in Chinese listed firms
ISSN: 1321-7348
Article publication date: 19 November 2021
Issue publication date: 19 January 2022
Abstract
Purpose
Using unique trade credit insurance data from China, we examine whether trade insurance claims are associated with audit efforts and audit quality.
Design/methodology/approach
The paper is based on a sample of Chinese firms to study insurance claims of trade credit insurance that affects abnormal audit fees.
Findings
In this study, we find that firms with high insurance claims pay higher abnormal audit fees. Further, our findings indicate that firms with high insurance claims have a short audit report lag and tend to select local audit firms.
Originality/value
To the best of our knowledge, this is the first study to investigate the association between trade credit insurance claims and audit efforts. In addition, we contribute to the literature on the agency cost of abnormal audit fees.
Keywords
Acknowledgements
Funding: The work was supported by the Youth Project of Beijing Social Science Foundation (21GLC037), Rutgers School of Business Camden summer research grant, National Natural Science Foundation of China NSFC-71972011 and Academic Research Projects of Beijing Union University (SK90202103, SK90202110, JS10202004 and XP202011).
Citation
Chen, S., Guo, J., Tian, Y. and Yan, L. (2022), "Insurance claims and audit quality: evidence from trade credit insurance in Chinese listed firms", Asian Review of Accounting, Vol. 30 No. 1, pp. 97-120. https://doi.org/10.1108/ARA-08-2021-0156
Publisher
:Emerald Publishing Limited
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