A Study On The Impact Of Negative Media Coverage On Audit Quality

On the whole,China's news media industry has achieved vigorous development and plays a decisive role in the capital market.On the one hand,the news media has given fUll play to its role as an "information intermediary" in the capital market.On the other hand,news media reporting on the behavior of the main body of the capital market has a great role in supervising and promoting the stability and fairness of the market.Through the analysis and research of this article,it is of great theoretical and practical significance to better play the negative news reports to improve the audit quality of listed companies.This article takes a sample of 7,380 observations from more than 3,000 companies listed on China's A-share market from 2014 to 2016.Considering the nature of the property rights of the audited company and the size and reputation of the accounting firm,the absolute value of discretionary accruals is used as a proxy for the quality of auditing.It is manually collected from the full-text database of CNKI China' s major newspapers and Baidu News Client.The negative reports of sample companies,combined with the theory of reputation,agenda setting theory,and information asymmetry theory,have empirically tested the relationship between media negative reports and audit quality.First,descriptive statistics were collected on the collected sample data,and the basic characteristics of the sample variables were briefly analyzed.Secondly,a correlation analysis of the explanatory variables,explanatory variables,and control variables,as well as the variance inflation factor test of the variables,was performed to verify whether the sample variables had multiple collinearity problems.Then,an empirical analysis of the multiple regression model based on the three hypotheses was conducted to test the relationship between negative news reporting and audit quality in the news media.Finally,we use audit type(Audittype)as a substitute for audit quality to conduct further robustness tests on multiple regression results.The empirical results show that:First,negative media reports have a significant positive correlation with the audit quality of listed companies.This also means that when the number of negative reports of the news media on the audited units is greater,the deeper the reporting level,the higher the audit quality of the audited units.Secondly,the influence of negative media coverage on the four top-ranking international companies is even more significant.After making a regression analysis after distinguishing between the Big Four and Non-Four Big Samples in the sample,it is found that compared with the non-Four Big Four,the Big Four international accounting firms have lower tolerance for speculative and aggressive earnings management activities of the audited units.The financial reports of the“Big Four" audit are more credible,and the misreporting of financial statements is correspondingly greatly reduced.Therefore,the audited units for high-quality financial reports and sound corporate governance are issued The quality of the audit report will also be higher.Finally,the empirical analysis of the nature of the listed company's property rights is divided between Chinese non-state-owned and non-state-owned enterprises.The results show that compared with state-owned enterprises,there is more fierce competition among non-state-owned listed companies in China.After being exposed by negative media reports,Future investment,financing and corporate reputation will have many adverse effects.Therefore,after being exposed to negative media reports,non-state-owned enterprises will pay more attention to their financial credibility,reduce the level of earnings management,and indirectly improve the quality of audits.