臺大管理論叢 NTU Management Review VOL.30 NO.2

Do Government Initiatives and Reasons for Auditor-Client Realignment Influence Audit Fees and Audit Quality? Evidence from China 230 support from China’s MOF. We also control for variables that are identified in prior audit fee studies, such as Francis and Wang (2005) and Wang et al. (2008). 3.2.3 Effects on Audit Quality To analyze the effect of the reasons for auditor-client realignment and of the government initiative on audit quality, we use the modified audit opinions as a proxy for the dependent variable. Below, we develop the probit regression model according to Huang et al. (2015): MAO = β 0 + β 1 REASON_CLIENT + β 2 REASON_CPA + β 3 REASON_GOV + β 4 POST_2007 + β 5 REASON_CLIENT × POST_2007 + β 6 REASON_CPA × POST_2007 + β 7 REASON_GOV × POST_2007 + β 8 LNTA + β 9 QUICK + β 10 RECTA + β 11 INVTA + β 12 DA + β 13 TURNOVER + β 14 ROA + β 15 LOSS + β 16 ADJRETURN + β 17 BETA + β 18 STDRET + β 19 EM + β 20 CIFIRM + β 21 CICPA + β 22 EXPFIRM + β 23 EXPCPA + β 24 SIZEFIRM + β 25 SIZECPA + β 26 LMAO + β 27 LEGALFORMLLP + β 28 LEGALFORMLLC + β 29 TOP10 + β 30 LOCAL+ β 31 STATE + β 32 CMI + β 33 GDI + β 34 LEI + β 35 ISSUEB + β 36 ISSUEH + EXCHANGE + INDUSTRY + ε . (3) As illustrated in Model (3) above, the dependent variable of the regression model is modified audit opinion ( MAO ) . This variable is code “1” if a firm receives a modified audit opinion and “0” otherwise. 10 For this analysis, variables of our research interest are REASON_CLIENT , REASON_CPA , REASON_GOV , POST_2007 , REASON_CLIENT × POST_2007 , REASON_CPA × POST_2007 , and REASON_GOV × POST_2007. As shown in Model (3), we include all the control variables identified in Huang et al. (2015). 4. Empirical Results 4.1 Descriptive Statistics and Univariate Analysis Table 2 reports the descriptive statistics of the study. As shown in the table, the mean of REASON_DISCLOSURE is 0.476 (47.6%), indicating that less than half the firms in the pool of observations chose to disclose their reasons for auditor-client realignment. As for the means of STATE and POST_2007 , these values are 0.641 (64.1%) and 0.721 (72.1%), 10 In this study, auditors issuing any opinion other than “standard unmodified” are treated as MAO .