Research on the Influence Mechanism of Media Supervision on Audit Fees

Abstract

As an informal external governance mechanism, media supervision is known as the "fourth party right" independent of the legislative, judicial and administrative systems, and plays the role of "economic police". Its corporate governance effect has been unanimously recognized by scholars at home and abroad. Audit fees have always been a hot issue in the field of finance. There are many factors that affect audit fees, from the characteristics of companies and firms to risk factors such as corporate governance, and then to the external environment. At present, formal external environmental mechanisms such as laws and regulations and government supervision are considered in the study of the influence of external environmental factors on audit fees. Based on the audit contract theory and signal transmission theory, the "agenda-setting" theory of journalism and communication, the "bedding effect" and "framework" theory of psychology as the analytical framework, this paper uses the controllable accrued profit as the measurement index of audit quality, and studies the mechanism of media supervision on the audit quality from the perspective of negative media reports and media supervision environment, as well as the impact of media supervision on the audit quality of auditor changes. The research shows that the degree of negative media coverage of listed companies and the media supervision environment are positively correlated with audit quality.

Do the unusual resignations of independent directors affect auditors’ professional judgment?

“…While Salau et al (2017) examined the relationship between independent directors’ resignations and corporate governance flaws, they did not delve into how these resignations specifically affect auditors’ judgments [ 36 ]. Notably, Huang (2023) discussed how media reports influence auditors’ professional judgment [ 37 ]. Although this paper does not directly focus on media influence, resignations of independent directors often come with extensive media coverage, which may indirectly affect auditors’ risk perception and professional judgment.…”