Table 8: Political Connections and Audit Fees (Heckman IMR Method) Panel A: Second-stage regression: Political connections and audit fees PC Dummy + 0.100*** PCON [5.70] ? -0.135*** MILLS [-3.08] Variance inflation factors (VIFs) 1.11 PCON 16.54 MILLS Control variables Yes Industry effects Yes Year effects Yes Observations 27,393 Adj. R2 0.83 Panel B: Four-stage model: Probability of establishing political connections PC Dummy - -0.001*** DISTANCE [-5.89] + 4.412*** PROBPC [8.72] + 0.263*** SIZE [32.04] ? 0.076** LEV [2.51] ? -0.164 INVREC [-1.82] ? -0.475*** ROA [-7.87] ? 0.014 LOSS [0.47] + -0.017*** NGS [-3.51] + 0.045*** NBS [7.08] ? 0.072*** YE [2.75] ? 0.169*** OPINION [2.72] ? -0.039 BIG4 [-1.24] ? 0.068 FOREIGN [0.26] ? -0.003 QUICK [-0.51]
Table 8: Political Connections and Audit Fees (Heckman IMR Method) Panel A: Second-stage regression: Political connections and audit fees PC Dummy PCON + 0.100*** [5.70] MILLS ? -0.135*** [-3.08] Variance inflation factors (VIFs) PCON 1.11 MILLS 16.54 Control variables Yes Industry effects Yes Year effects Yes Observations 27,393 Adj. R2 0.83 Panel B: Four-stage model: Probability of establishing political connections PC Dummy DISTANCE - -0.001*** [-5.89] PROBPC + 4.412*** [8.72] SIZE + 0.263*** [32.04] LEV ? 0.076** [2.51] INVREC ? -0.164 [-1.82] ROA ? -0.475*** [-7.87] LOSS ? 0.014 [0.47] NGS + -0.017*** [-3.51] NBS + 0.045*** [7.08] YE ? 0.072*** [2.75] OPINION ? 0.169*** [2.72] BIG4 ? -0.039 [-1.24] FOREIGN ? 0.068 [0.26] QUICK ? -0.003 [-0.51]
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