| Summary: | 碩士 === 國立政治大學 === 會計研究所 === 101 === This paper examines the effect of regulations on audit quality and audit fees in China. China’s State-owned Assets Supervision and Administration Commission of the State Council (SASAC) issued some rules in 2004 to improve audit quality for state-owned enterprises controlled by the central government (CSOEs), such as SASAC Order No. 5 and SASAC Rule No. 173. Under these rules, SASAC mandatorily assign auditors for CSOEs, and CSOEs’ managers have to retain auditors for at least 2 years and at most 5 years. This paper investigates listed companies in Shenzhen and Shanghai Stock Exchange from 2001 to 2009, and uses abnormal accruals as proxy for audit quality and a difference-in-differences design to examine the effect of these rules on audit quality and audit fees. The empirical results suggest that after the enactment of these rules, the audit quality for CSOEs relative to other companies improves and the audit fees for CSOEs relative to other companies reduce.
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