Table 4 Abnormal audit fees and cost of...

Table 4

Abnormal audit fees and cost of equity capital

	(1)	(2)	(3)	(4)
Variables	LNARL	PEG	MPEG	OJN
CONSTANT	3.691^***	−0.244^***	−0.358^***	−0.223^***
CONSTANT	(94.388)	(−4.462)	(−7.253)	(−6.436)
ABNARL		0.076^***	0.116^***	0.081^***
ABNARL		(5.906)	(10.038)	(9.791)
BODSIZE	−0.05^***	0.005^***	0.002	0.001
BODSIZE	(−7.428)	(2.684)	(1.019)	(0.473)
INDDIR	−0.067^***	0.003	0.009^***	0.006^***
INDDIR	(−5.854)	(1.137)	(3.386)	(3.139)
CEODUAL	−0.01^***	0.002^*	0.003^***	0.002^***
CEODUAL	(−2.751)	(1.924)	(3.381)	(3.111)
BIGN	−0.04^***	−0.002	−0.002	−0.003^***
BIGN	(−6.302)	(−1.14)	(−1.025)	(−2.711)
GCOPIN	0.11^*	−0.019	−0.009	0.003
GCOPIN	(1.891)	(−1.231)	(−0.631)	(0.309)
ICWEAK	0.004	−0.001	−0.001	−0.001^*
ICWEAK	(0.966)	(−0.598)	(−1.047)	(−1.92)
LNSIZE	−0.074^***	0.004^***	0.002^**	0.002^***
LNSIZE	(−33.478)	(6.179)	(2.566)	(3.648)
LEV	0.035^***	0.012^***	0.021^***	0.019^***
LEV	(3.046)	(4.12)	(7.734)	(9.933)
BTM	0.116^***	0.046^***	0.031^***	0.028^***
BTM	(14.648)	(16.41)	(12.233)	(15.792)
LOSS	0.009	0.009	0.011^***	0.002
LOSS	(0.955)	(0.019)	(5.111)	(1.295)
BETA	−0.002	0.003^***	0.006^***	0.005^***
BETA	(−0.858)	(5.281)	(12.337)	(13.638)
ZSCORE	−0.012^***	0.005^***	0.004^***	0.003^***
ZSCORE	(−4.295)	(6.491)	(5.587)	(6.869)
FYE	0.026^***
FYE	(6.352)
RESTATE	0.028^***
RESTATE	(5.22)
LNAFEE	0.06^***
LNAFEE	(18.183)
LNNAFEE	−0.001
LNNAFEE	(−1.284)
BODMEET		0.001	0.002^**	0.001
BODMEET		(0.725)	(2.03)	(1.372)
OWNCON		−0.002	−0.003^**	−0.002^**
OWNCON		(−1.223)	(−2.08)	(−2.194)
SALEGR		−0.009^**	0.014^***	0.011^***
SALEGR		(−2.287)	(4.072)	(4.548)
ROA		−0.027^**	−0.031^***	0.017^**
ROA		(−2.274)	(−2.842)	(2.296)
INDUSTRY_FE	Yes	Yes	Yes	Yes
YEAR_FE	Yes	Yes	Yes	Yes
Observations	12,468	12,468	12,468	12,468
R-squared	0.312	0.188	0.256	0.329

	(1)	(2)	(3)	(4)
Variables	LNARL	PEG	MPEG	OJN
CONSTANT	3.691^***	−0.244^***	−0.358^***	−0.223^***
CONSTANT	(94.388)	(−4.462)	(−7.253)	(−6.436)
ABNARL		0.076^***	0.116^***	0.081^***
ABNARL		(5.906)	(10.038)	(9.791)
BODSIZE	−0.05^***	0.005^***	0.002	0.001
BODSIZE	(−7.428)	(2.684)	(1.019)	(0.473)
INDDIR	−0.067^***	0.003	0.009^***	0.006^***
INDDIR	(−5.854)	(1.137)	(3.386)	(3.139)
CEODUAL	−0.01^***	0.002^*	0.003^***	0.002^***
CEODUAL	(−2.751)	(1.924)	(3.381)	(3.111)
BIGN	−0.04^***	−0.002	−0.002	−0.003^***
BIGN	(−6.302)	(−1.14)	(−1.025)	(−2.711)
GCOPIN	0.11^*	−0.019	−0.009	0.003
GCOPIN	(1.891)	(−1.231)	(−0.631)	(0.309)
ICWEAK	0.004	−0.001	−0.001	−0.001^*
ICWEAK	(0.966)	(−0.598)	(−1.047)	(−1.92)
LNSIZE	−0.074^***	0.004^***	0.002^**	0.002^***
LNSIZE	(−33.478)	(6.179)	(2.566)	(3.648)
LEV	0.035^***	0.012^***	0.021^***	0.019^***
LEV	(3.046)	(4.12)	(7.734)	(9.933)
BTM	0.116^***	0.046^***	0.031^***	0.028^***
BTM	(14.648)	(16.41)	(12.233)	(15.792)
LOSS	0.009	0.009	0.011^***	0.002
LOSS	(0.955)	(0.019)	(5.111)	(1.295)
BETA	−0.002	0.003^***	0.006^***	0.005^***
BETA	(−0.858)	(5.281)	(12.337)	(13.638)
ZSCORE	−0.012^***	0.005^***	0.004^***	0.003^***
ZSCORE	(−4.295)	(6.491)	(5.587)	(6.869)
FYE	0.026^***
FYE	(6.352)
RESTATE	0.028^***
RESTATE	(5.22)
LNAFEE	0.06^***
LNAFEE	(18.183)
LNNAFEE	−0.001
LNNAFEE	(−1.284)
BODMEET		0.001	0.002^**	0.001
BODMEET		(0.725)	(2.03)	(1.372)
OWNCON		−0.002	−0.003^**	−0.002^**
OWNCON		(−1.223)	(−2.08)	(−2.194)
SALEGR		−0.009^**	0.014^***	0.011^***
SALEGR		(−2.287)	(4.072)	(4.548)
ROA		−0.027^**	−0.031^***	0.017^**
ROA		(−2.274)	(−2.842)	(2.296)
INDUSTRY_FE	Yes	Yes	Yes	Yes
YEAR_FE	Yes	Yes	Yes	Yes
Observations	12,468	12,468	12,468	12,468
R-squared	0.312	0.188	0.256	0.329

Note(s): Standard errors are robust to heteroscedasticity and clustered by firm. t-values are in parentheses. ^***p < 0.01, ^**p < 0.05, ^*p < 0.10. Variable definitions are reported in Appendix

Source(s): Created by authors

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