The Impact Of Negative Media Coverage On Audit Fees

Reasonable audit fees can not only maintain the survival and development of the auditors themselves,but also help the audit industry to effectively allocate market resources.The early research on the influencing factors of audit fees basically followed the earliest Simunic multiple regression model,which was limited to the characteristics of the company and the auditor,and later gradually extended to the external supervision environment.It has long been documented that negative media reports have a supervisory and governance effect on the capital market.News media can reduce the degree of information asymmetry between the information source and the receiver,and increase the transparency of the capital market.In the audit market,negative media reports can become an important source of information for auditors in the decision-making process.So,can the negative media reports influence the auditor's decision-making and the implementation of audit procedures in the process of performing business,thereby affecting audit fees?At the same time,the internal control quality and information transparency of an enterprise can also play a role in improving the quality of earnings and information transmission.Can the quality of internal control and information transparency also affect the decision-making behavior of auditors?How will the relationship between negative media coverage and audit fees change?Based on the above considerations,this paper combines the agenda setting theory,audit pricing model and other theories,and takes China's A-share main board listed companies during 2014-2017 as the research object.The research finds that:(1)the more negative media reports the company has,the higher audit fees in the current period;(2)control other conditions unchanged,and high-quality internal control can alleviate the positive correlation between negative media reports and audit fees(3)control other conditions unchanged,high information transparency can alleviate the positive correlation between negative media reports and audit fees.The results show that negative media reports play an important role in risk-warning in auditor career decision-making,and the quality of internal control and information disclosure can help reduce audit risk.Therefore,it is important and necessary to strengthen the supervision function of media information and improve the internal control construction and information disclosure mechanism of enterprises.