How Do Auditors Respond to Corporate Innovation Activities —Evidence from Chinese Listed Companies

Li  Wang

doi:10.4236/ajibm.2020.101012

Li Wang

Abstract: Innovation is the first driving force and often coexists with risks. As an important tool of risk control, audit plays an important role in preventing and managing such risks. Based on the relevant data of Chinese A-share non-financial listed companies from 2007 to 2018, this paper explores how auditors respond to the risks caused by enterprise innovation. The results show that when dealing with audit risk, in the study of the relationship between enterprise innovation activities and audit fees, the higher the investment in innovation activities and the expenditure on capitalized research and development, the auditors will significantly increase their fees. Only when dealing with capitalized R&D expenditure are auditors more likely to give non-unqualified audit opinions. In the study of auditor’s risk response attitude, it is found that auditors do not improve the degree of audit effort and audit quality, that is, the pricing strategy of audit response to enterprise innovation activities is only a way of charging risk premium, which leads to the conclusion that auditors do not adopt a positive attitude on the whole. This paper also further analyzes various environments to provide relevant suggestions for the formulation of system and audit supervision of relevant departments, and indirectly verifies the necessity and correctness of the formulation of regulations of CICPA requiring certified public accountants to audit innovative information.

Keywords: Corporate Innovation, Audit Risk, Audit Fee, Audit Opinion

Cite this paper: Wang, L. (2020) How Do Auditors Respond to Corporate Innovation Activities
—Evidence from Chinese Listed Companies. American Journal of Industrial and Business Management, 10, 167-190. doi: 10.4236/ajibm.2020.101012.

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