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.