Collaboration or Opportunism? Supplier Equity Stakes in Customers and Audit Fees
Duo Wang, Yunge Hu, Yanxi Li, Lijia YangABSTRACT
Research Question
Based on relational and resource dependence theories, this study investigates the impact of supplier equity stakes in customers (SESC) on audit fees and its underlying mechanisms from the perspective of auditors' behavioral decision‐making.
Research Findings
The findings reveal that SESC significantly reduces audit fees, supporting the collaboration hypothesis. Mechanism analysis indicates that SESC lowers audit fees by reducing operational risk and audit complexity. Heterogeneity analysis shows that the effect of SESC on reducing audit fees is weakened when the holding level is high, the duration is short, and the supplier is state‐owned, whereas when the firm's external bargaining power and industry monopoly power are low, this reduction effect is enhanced.
Theoretical Implications
This study enriches the literature on supply chain characteristics by examining equity relationships and enriches the literature on the influence of supply chain characteristics on auditors' behavioral decisions from the perspective of SESC. Furthermore, this study extends the comprehension of SESC in corporate governance and auditing practices through the theoretical lens of relational theory and resource dependence theory.
Practitioner Implications
First, enterprises should recognize the strategic role of SESC in modern supply chain management and actively cultivate and develop this innovative relationship to enhance supply chain resilience and security. Second, auditors should pay heightened attention to changes in SESC to effectively evaluate supply chain stability and adjust audit workloads accordingly. Lastly, policymakers should strengthen policy support and incentive mechanisms for supply chain equity holding practices.