Variable type | Variable name | Variable interpretation |
Dependent variables | |Da| | Audit quality, the absolute value of earnings management level, calculated according to Dechow et al. |
Cscore | Audit quality, indicated by accounting conservatism, which is calculated by the model of Khan and Watts [17] | |
Independent variables | Lnfee | Audit fees, expressed in natural logarithm |
Resfee | Abnormal audit fees, the residual of the model (1) | |
Dlnfee | Abnormal audit fees, annual change value of natural logarithm | |
Control variables | Big10 | Dummy variables of Big ten, it is 1 when the firm is big ten; otherwise 0. |
Op | Audit opinion. 1 for modified audit opinion, 0 otherwise. | |
Inv | Inventory level. Inventory divided by total asset. | |
Rec | Account receivable level. Account receivable divided by the total assets. | |
Em | Earnings management tendency. 1 for the occurrence of annual loss last year, 0 otherwise. | |
Change | Firm change, 1 for the occurrence of firm change, 0 otherwise | |
Sqsub | The complexity of audit service, indicated by the number of company segments. | |
Roa | Profitability, measured by company’s return on total assets. | |
Lev | Financial leverage, measured by asset-liability ratio. | |
Sale | Company scale, measured by the natural logarithm of sales revenue. |