Impact of COVID-19 on audit fees in Chinese family firms: exploring the roles of ownership, management and directorship

Purpose This study investigates how family ownership and involvement in management and directorship influenced audit fees in Chinese family firms during the COVID-19 pandemic, leveraging China’s unique cultural and institutional context. Design/methodology/approach Using data from the China Stock Market and Accounting Research Database, the study analysed 18,889 firm-year observations from family-owned listed firms over the 2015–2022 period, employing two-way fixed-effect regressions, robustness tests and controls for endogeneity. Pre- and post-COVID-19 periods (2015–2018 versus 2019–2022) were compared to assess the impact of family governance on audit fees during the pandemic. Findings The results reveal a significant negative relationship between family ownership and audit fees during COVID-19, compared to the insignificant negative pre-crisis association. Family involvement in management consistently reduced audit fees across the whole period, while directorship showed no significant effect. The findings indicate that Confucian-inspired familial alignment mitigated Type I agency problems, reducing audit risk without significantly increasing Type II agency conflicts. Practical implications Family firms can leverage trust-based management to strengthen resilience and reduce external oversight costs, while auditors can optimise procedures for Chinese family firms, reducing costs associated with lower perceived risk. Policymakers could consider tailoring regulations to acknowledge culturally specific governance strengths. Originality/value This study contributes to the audit fee literature by emphasising the moderating influence of Confucian values and China’s cultural and institutional environment. By demonstrating reduced audit fees in Chinese family firms during a global crisis, the study challenges Western-centric agency theory predictions.