Research On The Impact Of Media Reports On Audit Fees

The audit fee is the fee charged by the CPA after providing the audit service,which mainly includes the audit product cost,risk premium and normal profit.Reasonable audit fee is not only beneficial to the survival and development of accounting firm,but also plays an important role in maintaining the stability of CPA industry and even the whole market economic order.However,in recent years,the audit fees of accounting firms in China have shown a significant upward trend,and the average annual growth rate is much higher than the market value growth rate of listed companies and the current GDP growth rate.This makes it impossible to fully explain this phenomenon in the traditional view that corporate characteristics and accounting firm characteristics affect audit fees.And a series of famous audit failures such as Galaxy technology and Zixin pharmaceutical were exposed by media,which attracted the attention of the SFC.Because of this,scholars have begun to notice the external governance role of the news media.As an effective supplement to the formal supervision mechanism of the market,the news media plays an important role in the capital market.It has the functions of reducing market information asymmetry and improving market information transparency.However,compared with external audit,media have poor timeliness,then will the news media influence the audit fees of CPAs based on the information dissemination mechanism and reputation mechanism,thus indirectly exerting the external governance role of the company?In view of this,this paper adopts the method of normative analysis and empirical research,using the financial data and audit data of A-share listed companies from 2008 to2017,studies the influence of total media coverage and negative media coverage on the actual audit fees and abnormal audit fees,and furtherexamine whether there are differences in the mechanism of media coverage's impact on the actual audit fees and forward abnormal audit fees between listed companies with different property rights.The study finds that:(1)the total media coverage and negative media coverage significantly increase the actual audit costs;(2)distinguish the direction of abnormal audit costs,then find that the total media coverage and negative media coverage significantly increase the forward abnormal audit costs and reduce the negative abnormal audit costs;(3)divide the research samples into two groups,state-owned enterprises and non-state-owned enterprises,then study the impact of media reports on actual audit fees and forward abnormal audit costs separately.Compared with state-owned enterprises,the positive correlation between total media coverage and actual audit fees?forward abnormal audit costs,negative media coverage and actual audit fees?forward abnormal audit fees are more significant in non-state-owned enterprises.Using the "agenda setting function" of the media,this paper examines the impact of the total media coverage and negative media reports on audit fees,confirms that both media attention and negative reports will have an impact on auditors' risk perception and judgment of listed companies,enriches and improves the theoretical system of the impact of news media on audit fees,and also providing more accurate evidence for the media to participate in corporate governance by affecting auditor behavior.Secondly,the media's reports on listed companies with different property rights have led to the difference in the actual audit fees and abnormal audit fees of the firm,shows that the listed company's information disclosure system will affect the sensitivity of CPAs to media information.