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Strategic Alignment Between Supply Chain Partners and Supplier Audit Fees
Journal article   Peer reviewed

Strategic Alignment Between Supply Chain Partners and Supplier Audit Fees

Hsihui Chang, Rong‐Ruey Duh, W. Robert Knechel and Sheng Liu
Journal of business finance & accounting, Forthcoming
15 Sep 2025
DOI: https://doi.org/10.1111/jbfa.70011

Abstract

audit fees industry specialist auditors material misstatement risk strategy strategic alignment supply chain
This study examines whether strategic alignment between participants in the same supply chain is associated with supplier audit fees. We hypothesize that strategic alignment between suppliers and customers can mitigate the business and audit risk associated with auditing a supplier firm, which will be associated with lower audit fees. We utilize disclosures about major customers to construct a dataset of supplier–customer dyads and then compare the relative strategies of the two parties. The empirical results support our hypothesis that strategic alignment between suppliers and their major customers is associated with lower audit fees for the supplier. We also find that the negative association between strategic alignment and supplier audit fees is more pronounced when auditors are industry specialists. Our results remain robust when using alternative measures of strategic alignment, testing for functional form misspecification, and addressing potential endogeneity.

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Collaboration types
Domestic collaboration
International collaboration
Web of Science research areas
Business, Finance
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