Based on the publicly disclosed information of the top five customers and suppliers of A-share listed companies from 2007 to 2022, this study systematically examines the impact of downstream customers’shadow banking activities on the audit fees of upstream suppliers from the perspective of supply chain risk spillover. The findings reveal that the shadow banking activities of downstream customers lead to an increase in the audit fees of upstream suppliers. Mechanism analysis indicates that such activities exacerbate the operational and informational risks faced by upstream firms, thereby prompting auditors to charge higher risk premiums and in turn raising audit fees. Heterogeneity analysis further demonstrates that the risk transmission effect of downstream customers’ shadow banking activities is more pronounced when the upstream suppliers are state-owned enterprises, exhibit weaker internal governance, operate in regions with weaker legal environments, or employ auditors with a higher level of industry expertise.