Media Governance And Audit Quality—Empirical Evidence Based On Chinese Private Listed Firms On A-Share Main Board

Audit is a service provided by accounting firms, it is a mean to prevent the distortion of accounting information. High audit quality can help information users to get real company operation, and help them to make correct investment decisions. So, at present, audit quality is always a hot research area. And we have many measuring standards for audit quality, for example, accounting firms, audit specialty, auditing opinion and so on. In consideration of the availability of the data, based on the previous research, this study choose three commonly used indicators, the audit opinion, auditing fee and earnings management, to replace audit quality, so as to check the relation between media governance and audit quality. The common point between media governance and audit quality is that they are supervising the public companies, except the difference among the contents and forms. So what is the relation between the media governance and the audit quality? Does the media will impact on the audit quality?In view of the above questions, the study will do an empirical test on the basis of the theoretical analysis. Starting from our institutional background, this study discusses the formation of media governance functions using three mechanisms. Based on the theory of media having the supervision effect or not and how to effect the audit quality, this study starts from all non-financial private listing companies, using the media coverage to replace the media governance and the audit opinion and audit fee and earnings management replacing the audit quality, to test the hypothesis. To test the robustness of the results, this study adopts the factor analysis to synthetically evaluate the audit quality.From this study, actually we get three results:first, private listing firms with high media coverage degree have high audit quality. Second, private listing firms with high media press coverage degree have high audit quality. At last, in the process of robustness testing, we find that media coverage works better in the companies that have press coverage than the companies those don’t have press coverage. So, we suggest that, under the condition of our legal system is not so perfect, auditors can make full use of the media coverage, especially the press coverage, so as to promote the capital market developed healthy and orderly.