Abstract Using insights from the social network theory which posits that individuals with high network centrality have influence and power within their social networks, we argue that CEO network centrality increases the CEO bargaining power in audit fee negotiations. We find that audit fees are lower in firms managed by CEOs with high network centrality. We also find that high‐centrality CEOs do not negotiate audit fees at the expense of lower‐quality audit services. We further document the influence high‐centrality CEOs have on the audit decisions of their social peers within the network. For example, we show that less central (i.e., peripheral) CEOs are likely to hire auditors that do work for firms with CEOs enjoying high levels of network centrality. Together our findings suggest that high network centrality reflects a bargaining power CEOs can use to lower their audit fees.

Mohamad Mazboudi

Salim Chahine

Yiwei Fang

Mingying Cheng

Financial Markets Institutions and Instruments

Financial Markets, Institutions and Instruments bridges the gap between the academic and professional finance communities. With contributions from leading academics, as well as practitioners from organizations such as the SEC and the Federal Reserve, the journal is equally relevant to both groups. Each issue is devoted to a single topic, which is examined in depth, and a special fifth issue is published annually highlighting the most significant developments in money and banking, derivative securities, corporate finance, and fixed-income securities.

Financial Markets, Institutions and Instruments aims to bridge the gap between the academic and professional finance communities. The journal features contributions from leading academics as well as practitioners from organizations such as the SEC and the Federal Reserve, making it relevant to both groups. Each issue focuses on a specific topic, examined in depth, and an annual special fifth issue highlights significant developments in money and banking, derivative securities, corporate finance, and fixed-income securities.

《金融市场、机构与工具》旨在弥合学术界与专业金融界之间的差距。该期刊汇集了来自顶尖学者和来自美国证券交易委员会（SEC）及联邦储备系统等机构的从业者的贡献，因而对这两个群体都具有重要意义。每期专注于一个特定主题，进行深入探讨，并且每年出版一份特别的第五期，重点介绍货币与银行、衍生证券、公司金融和固定收益证券等领域的重大进展。

Do high‐centrality CEOs influence audit outcomes?

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