Audit's Geographical Distance,Media Coverage And Internal Control Quality

Effective internal control can not only help enterprises improve the quality of financial information and reduce business risks under the framework of national laws and regulations,but also promote the implementation of strategic goals of the enterprise to a certain extent,ensure the effectiveness of the business,and promote the healthy development of the enterprise.However,cases of internal control failures have recurred frequently over the years.Between 2013 and 2018,there were 371 listed companies related to internal control failures in CSMAR's "Chinese Listed Companies' Violation Treatment Research Database",some of these companies have been punished more than twice due to the failure of internal control.This phenomenon shows that the current internal control construction tasks of Chinese enterprises still have a long way to go.Therefore,we should study the factors affecting the quality of internal control and find ways to improve internal control quality,and this is also a key task of academic and practical circles.From the perspective of new economic geography,this paper analyzes the impact of the auditor's geographical distance(the geographical distance between the accounting firm's branch and the enterprise)on the quality of the company's internal control,and puts this research under the institutional factor of media coverage.Specifically,this article selects China's A-share motherboard listed companies from 2013 to 2018 as the research sample,and empirically tests the relationship between audit geographical distance and internal control quality,the relationship between media coverage and internal control quality,the relationship between audit geographical distance and internal control quality of enterprises under the regulation of media coverage.The empirical results show that the geographical distance between the accounting firm and the listed company will significantly affect the quality of the company's internal control.When the geographical distance is far,the quality of the internal control is low,and as the geographical distance changes(farther / closer),the internal control quality will also change accordingly(down / rise);When the media attention is high,the quality of internal control of the listed company is high;the media attention will weaken the negative influence of geographic distance on the quality of internal control.In order to help listed companies improve their internal control quality,this article puts forward relevant suggestions from three aspects based on the research conclusions:accounting firms,enterprises,and regulatory agencies,which has strong practical significance.In addition,this article expounds the impact of auditors' geographical distance on the quality of internal control of the company from the perspective of "soft information" asymmetry,and dynamically analyzes the changes in the quality of internal control caused by distance changes,which opens a new perspective for the study of internal control quality.At the same time,this paper introduces the external connection variable of media coverage in the study of distance factors,which also makes up for the shortcomings of the current research on audit distance,which does not consider the institutional factors on the effect of reducing space distance,and provides new idea for future related research,this has strong theoretical significance.