Cross-section analysis
| Variables | Low-risk firms | Low-risk firms | High-risk firms | High-risk firms | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| lnAud fee | lnAud fee | lnAud fee | lnAud fee | |||||||||
| Panel A: audit fees and proximity (low-risk vs high-risk firms) | ||||||||||||
| lnProx KM | 0.007** (0.004) | 0.022* (0.013) | ||||||||||
| lnProx min | 0.003** (0.001) | 0.006 (0.004) | ||||||||||
| Constant | 4.369*** (1.410) | 4.507*** (1.408) | 2.695* (1.410) | 2.764* (1.411) | ||||||||
| Observations | 235 | 235 | 233 | 233 | ||||||||
| Controls | Yes | Yes | Yes | Yes | ||||||||
| YearFE | Yes | Yes | Yes | Yes | ||||||||
| IndustryFE | Yes | Yes | Yes | Yes | ||||||||
| Prob>F | 0.000 | 0.000 | 0.000 | 0.000 | ||||||||
| Adjusted R-squared | 0.389 | 0.393 | 0.509 | 0.507 | ||||||||
| Panel B: audit report lag and proximity (low-risk vs high-risk firms) | ||||||||||||
| Variables | Low-risk firms | Low-risk firms | High-risk firms | High-risk firms | ||||||||
| lnARL | lnARL | lnARL | lnARL | |||||||||
| lnProx KM | 0.017 (0.020) | 0.029 (0.025) | ||||||||||
| lnProx min | 0.015 (0.022) | 0.051* (0.030) | ||||||||||
| Constant | 5.440*** (0.590) | 5.468*** (0.599) | 5.300*** (0.588) | 5.306*** (0.584) | ||||||||
| Observations | 235 | 235 | 233 | 233 | ||||||||
| Controls | Yes | Yes | Yes | Yes | ||||||||
| YearFE | Yes | Yes | Yes | Yes | ||||||||
| IndustryFE | Yes | Yes | Yes | Yes | ||||||||
| Prob>F | 0.00 | 0.00 | 0.000 | 0.000 | ||||||||
| Adjusted R-squared | 0.110 | 0.109 | 0.138 | 0.144 | ||||||||
| Panel C: audit quality and proximity (low-risk vs high-risk firms) | ||||||||||||
| Variables | Low-risk firms | Low-risk firms | High-risk firms | High-risk firms | Low-risk firms | Low-risk firms | High-risk firms | High-risk firms | Low-risk firms | Low-risk firms | High-risk firms | High-riskfirms |
| Jones1991 | Jones1991 | Jones1991 | Jones1991 | Stubben2010 | Stubben2010 | Stubben2010 | Stubben2010 | Small profit | Small profit | Small profit | Small profit | |
| lnProx KM | 0.001* (0.000) | 0.000 (0.001) | 0.0003* (0.0002) | 0.000 (0.001) | 0.207** (0.069) | 0.105 (0.189) | ||||||
| lnProx min | 0.000* (0.000) | 0.000 (0.000) | 0.0001** (0.000) | 0.000 (0.000) | 0.063** (0.024) | 0.134 (0.226) | ||||||
| Constant | 0.167 (0.146) | 0.258** (0.106) | 0.022 (0.123) | 0.024 (0.123) | 0.125* (0.068) | 0.135** (0.068) | −0.048 (0.072) | −0.048 (0.072) | −33.249** (3,815) | −36.075** (6,358) | −16.071 (1,755) | −15.547 (1,167) |
| Observations | 147 | 147 | 102 | 102 | 145 | 145 | 96 | 96 | 204 | 204 | 224 | 224 |
| Controls | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| YearFE | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| IndustryFE | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Adj. R2/Pseudo R2 | 0.006 | 0.013 | 0.044 | 0.043 | 0.026 | 0.037 | 0.002 | 0.002 | 0.542 | 0.516 | 0.298 | 0.298 |
| Variables | Low-risk firms | Low-risk firms | High-risk firms | High-risk firms | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| lnAud fee | lnAud fee | lnAud fee | lnAud fee | |||||||||
| lnProx KM | 0.007 | 0.022 | ||||||||||
| lnProx min | 0.003 | 0.006 (0.004) | ||||||||||
| Constant | 4.369 | 4.507 | 2.695 | 2.764 | ||||||||
| Observations | 235 | 235 | 233 | 233 | ||||||||
| Controls | Yes | Yes | Yes | Yes | ||||||||
| YearFE | Yes | Yes | Yes | Yes | ||||||||
| IndustryFE | Yes | Yes | Yes | Yes | ||||||||
| Prob>F | 0.000 | 0.000 | 0.000 | 0.000 | ||||||||
| Adjusted | 0.389 | 0.393 | 0.509 | 0.507 | ||||||||
| Variables | Low-risk firms | Low-risk firms | High-risk firms | High-risk firms | ||||||||
| lnARL | lnARL | lnARL | lnARL | |||||||||
| lnProx KM | 0.017 (0.020) | 0.029 (0.025) | ||||||||||
| lnProx min | 0.015 (0.022) | 0.051 | ||||||||||
| Constant | 5.440 | 5.468 | 5.300 | 5.306 | ||||||||
| Observations | 235 | 235 | 233 | 233 | ||||||||
| Controls | Yes | Yes | Yes | Yes | ||||||||
| YearFE | Yes | Yes | Yes | Yes | ||||||||
| IndustryFE | Yes | Yes | Yes | Yes | ||||||||
| Prob>F | 0.00 | 0.00 | 0.000 | 0.000 | ||||||||
| Adjusted | 0.110 | 0.109 | 0.138 | 0.144 | ||||||||
| Variables | Low-risk firms | Low-risk firms | High-risk | High-risk | Low-risk firms | Low-risk firms | High-risk | High-risk | Low-risk firms | Low-risk firms | High-risk | High-riskfirms |
| Jones | Jones | Jones | Jones | Stubben | Stubben | Stubben | Stubben | Small profit | Small profit | Small profit | Small profit | |
| lnProx KM | 0.001 | 0.000 (0.001) | 0.0003 | 0.000 (0.001) | 0.207 | 0.105 (0.189) | ||||||
| lnProx min | 0.000 | 0.000 (0.000) | 0.0001 | 0.000 (0.000) | 0.063 | 0.134 (0.226) | ||||||
| Constant | 0.167 (0.146) | 0.258 | 0.022 (0.123) | 0.024 (0.123) | 0.125 | 0.135 | −0.048 (0.072) | −0.048 (0.072) | −33.249 | −36.075 | −16.071 (1,755) | −15.547 (1,167) |
| Observations | 147 | 147 | 102 | 102 | 145 | 145 | 96 | 96 | 204 | 204 | 224 | 224 |
| Controls | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| YearFE | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| IndustryFE | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Adj. | 0.006 | 0.013 | 0.044 | 0.043 | 0.026 | 0.037 | 0.002 | 0.002 | 0.542 | 0.516 | 0.298 | 0.298 |
***p < 0.01; **p < 0.05; *p < 0.1 (Standard errors in parentheses)
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