Stock Exchange in the first and second years after the introduction of the SSE Corporate Governance Sector,
i.e., 2007 and 2008. The results based on the full sample show this relationship to be significant and negative.
In general, the audit fees of companies included in this sector are 5.44–7.44%18 lower than those of their Nongovernance
Sector counterparts. These results suggest that substitution theory provides a better explanation of
the relationship between corporate governance and audit fees than signaling theory. Subsample data also
shows corporate governance’s influence on audit fees is affected by corporate growth. The negative relation-