Abstract:Mergers and acquisitions are an important means for companies to improve their competitiveness. However, the expected risk exposure of future goodwill in recent mergers and acquisitions has caused shocks in the capital market. Using Chinese A-share listed companies from 2008 to 2018 as a research sample, this paper empirically analyzes the impact of M&A goodwill on audit fees. The research results show that M&A goodwill is positively correlated with audit fees, that is, auditors can successfully identify goodwill risks and react to audit fees, which reflects the effectiveness of the audit system. Through the inspection of the mechanism of action, it is found that agency costs and operating risks play a part of the intermediary role in the influence of M&A goodwill on audit fees. Further considering the moderating effect of external supervision, this paper finds that institutional investors can adjust the mediating effect of agency costs and operating risks.