We　investigate　the　role　of　external　auditors　in　constraining　managerial　slack.　Using　panel　data　on　Chinese　public　firms,　we　find　that　firms　hiring　Big　8　auditors　are　associated　with　reduced　managerial　slack　after　controlling　for　the　endogenous　auditor　choice.　We　also　document　that　Big　8　auditors　are　more　effective　in　mitigating　slack　in　privately　controlled　firms　and　firms　located　in　more　developed　regions.　Moreover,　we　show　that　international　Big　4　auditors　are　more　effective　than　the　domestic　Big　4,　and　the　Big　8　effect　is　more　salient　in　more　competitive　and　less　regulated　industries,　and　in　industries　with　higher　litigation　risks.　Finally,　we　document　a　positive　relationship　between　managerial　slack　and　audit　fees,　particularly　in　the　presence　of　Big　8　auditors.　Overall,　our　results　suggest　that　high-quality　external　auditors　play　an　important　corporate　governance　role　by　serving　as　both　bonding　and　controlling　mechanisms　to　mitigate　managerial　exploitation　of　firm　resources.　©　2018,　American　Accounting　Association.　All　rights　reserved.