The Relationship Among Negative Media,Investor Attention And Audit Quality

In the capital market,the quality of audit reflects the reliability of the company’s financial information quality.The existing literatures indicate that the level of audit quality is not only significantly related with the characteristics of audited accounting firm,accounting firm reputation,property and other factors,but also affected by the external environment supervision.In recent years,with the media industry market reform,the mainstream media play an increasingly prominent role in the capital market,Wanfu Biotechlogy forgery,Zhangzi Island and other major financial fraud cases are firstly exposed by the media.The function of media supervision not only significantly increases the probability of exposing financial fraud of listed companies,but also helps to improve the quality of audit of listed companies.This paper selects A-share listed companies of Shenzhen during the years 2010-2014 as research sample,and negative media along with media attention as the key explanatory variables,to conduct an empirical analysis on the influence of these variables on the audit quality of listed companies.The research results show that on one hand,the negative media significantly increases the risk of listed companies and accounting firms,for maintenance of their own reputation and market pressures,the companies will take the initiative to improve their audit quality.On the other hand,when the negative reports of the media are widely concerned by investors,it will expand the governance effect of negative media reports,thereby encourage listed companies and accounting firms to improve the quality of audit.The conclusions of this study are of great significance to improve and supervise the quality of audit information of Listed Companies in the securities market.First of all,this study confirms that there is a significant positive correlation between media negative reports,investor concerns and audit quality.Secondly,this paper studies for transition economy countries,relying on the media supervision and improve the quality of audit,will help to promote the healthy development of China’s capital market;Moreover,from the perspective of accounting information providers,this study enriches the meaning and connotation of audit quality,and generates positive effects on improvement of the quality of audit information.