Selecting the listed companies on the main board of the Shenzhen Stock Exchange and the Shanghai Stock Exchange from 2001 to 2016 as research samples, this paper empirically examining the effect of financial restatements on audit fees. The results show that the financial restatement is significantly positively correlated with the audit fees. The company’s auditing costs incurred by the financial restatement are significantly higher than those of the company without financial restatement; the companies that have financial restatements have a tendency to change their firms and purchase audit opinions. The fierce competition in the industry has intensified the malicious competition among firms, therefore, it is likely for firms to deliberately reduce the audit fees to attract low-end corporate customers with financial restatements. Due to the reputational incentive effect, the audit fees charged by large-scale firms with good reputation for companies with financial restatement significantly increase, forming a “Matthew effect” of the firm’s competition.