Association between executives' foreign background and audit fees

PurposeThis study aims to investigate the association between executives with foreign backgrounds and the audit fees paid by the Chinese-listed firms over the period from 2010 to 2020.Design/methodology/approachTo examine the association between executives' foreign experience and audit fees, this study constructs the following empirical model: Lnfeei,t = beta 0 + beta 1Foreign backgroundi,t + n-ary sumation beta j Controli,t + YearFE + IndFE + epsilon i,t (1).FindingsThis study finds that auditors charge higher fees for firms hiring more executives with foreign backgrounds. The results are robust to a battery of robustness checks, including fixed effects, alternative measures of independent variable, controlling for other characteristics of executives and auditors and entropy balancing method.Originality/valueThis study sheds light on how executives' foreign backgrounds affect audit fees, enriching the literature on executive heterogeneity and audit fees and providing important implications for audit practitioners.