Government Audit,Audit Announcement And Inefficient Investment Of Central Enterprises

After the reform and opening up,China's economic development has achieved gratifying results.There is no doubt that investment has always been the main driver of economic development.However,it should be noted that the rapid growth of China's economy involves a lot of redundant construction and over-investment.Although the economic growth has slowed down in recent years,it is precisely because of this that capital is more chasing hotspots,resulting in over-investment still existing and more prominent in state-owned enterprises.As a powerful and effective external supervision,government audits are an effective shock to both the central group companies and their listed companies.Government audits have administrative power guarantees that can play a broader role than external audits.Government audits not only identify the risk of material misstatement of financial statements,but also focus on compliance checks of state-owned assets.In the past,research has been focused on the effect of government audit on the supervision and control of management corruption and on-the-job consumption,but whether it has an impact on the investment decisions of central enterprises has not been sufficiently studied by the academic community.Therefore,this paper attempts to find out the relationship between government audit and investment activities of listed companies in central enterprises through empirical analysis,verify the supervision function of government audit,and explore the potential functional boundaries of government audit.This article uses the 2010-2016 National Audit Office's audit announcement published on the official website to refer to the central enterprise listed company as the experimental group,the unaudited listed company as the control group,using the difference in difference(DID)model to examine the government audit for the enterprise.This paper finds the following conclusions:(1)Government audits can effectively curb the excessive investment level of listed companies in central enterprises.(2)The suppression effect of government audit on excessive investment of listed companies in central enterprises is more significant when the internal governance mechanism of listed companies is better.(3)The harder the wording of the audit results of government audits,the greater the constraint on the excessive investment behavior of listed companies in central enterprises.Finally,combined with the empirical results,this paper proposes the following recommendations for state-owned enterprises and government audits:(1)Pay attention to and properly control the excessive investment of state-owned enterprises.(2)Strengthen internal governance to better coordinate with government audits,thereby curbing excessive investment behavior of state-owned listed companies.(3)Government auditing should not only focus on financial auditing,but also pay attention to the internal control audit of the audited entity,such as investment activity control.(4)The Audit Commission issued a government audit announcement to strengthen coordination with media supervision and jointly promote external supervision of state-owned enterprises.