Executive Vertical Concurrent, Accounting Prudence and Audit Pricing

Abstract

This study examines the impact of executive vertical cross-appointments on audit pricing from the perspective of accounting conservatism, using data from A-share listed companies in Shanghai and Shenzhen from 2009 to 2023. The findings reveal that vertical cross-appointments by executives tend to increase audit pricing, with this effect being more pronounced when the appointee is the company's chairman. Mechanism tests indicate that such appointments primarily elevate audit pricing by undermining accounting conservatism. When vertical cross-appointments occur, they exacerbate agency problems between major shareholders and minority shareholders, intensifying the "hollowing-out effect." Further analysis demonstrates that vertical cross-appointments in non-state-owned enterprises significantly influence audit pricing. This research expands existing studies on the economic consequences of executive cross-appointments and their impact on audit pricing, offering insights for improving corporate governance and strengthening government oversight.