Accounting Conservatism,Media Coverage And Abnormal Audit Fee

The Sixth Plenary Session of the 19 th CPC Central Committee and the 20 th CPC National Congress emphasised the need to achieve high-quality development,which cannot be achieved without high-quality accounting information and high-quality auditing work.The external environment of companies is changing and the potential operational and financial risks arising from uncertainty issues are becoming more prominent.This is why accounting conservatism remains an important information quality characteristic to this day and has a positive role to play in improving the credibility of financial statements.The prevention and control of risk is an important issue for auditors,and with the increasing improvement of audit-related laws and regulations and the further increase in regulation,the impact of a company’s accounting conservatism on the auditor’s risk assessment and determination of audit fees has become increasingly important.This is to curb the risk of potential material misstatement of the company and reduce the risk of the auditor’s examination.Compared to overall audit fees,abnormal audit fees can better reflect the auditor’s perception of hidden risks,avoid the impact of audit fee entrenchment to a certain extent,and help to examine the impact of accounting conservatism on audit pricing decisions more clearly and accurately.In addition,with the advent of the big data era and the development of an information-based society,media coverage has become an important force of public opinion,playing an important role in the transmission of information and monitoring governance.The media has become an important part of external corporate governance,with press coverage and public opinion playing an integral signalling role between companies and auditors.Therefore,studying the relationship between accounting conservatism and abnormal audit fees and the impact of media coverage on the relationship between the two,in line with the development background of the times,can help companies recognise the importance of sound accounting information,enrich the regulatory tools,regulatory indicators and policy formulation basis for abnormal audit fees,which not only has positive significance for safeguarding audit quality and promoting the healthy development of the audit profession,but also promotes the orderly market economy It is also important to promote orderly competition and high-quality economic development.Based on information asymmetry theory,principal-agent theory,deep pocket theory,reputation theory and agenda-setting theory,this paper takes all A-share listed companies in Shanghai and Shenzhen markets from 2009 to 2021 as research objects.Firstly,based on the background that China is in an era of high-quality economic development,the impact of accounting conservatism on abnormal audit fees is explored.Secondly,based on the background of increasingly stringent external regulation and rapid development of online news media,the impact of media coverage on the relationship between accounting conservatism and abnormal audit fees is explored.The study finds that accounting conservatism is negatively related to abnormal audit fees;the suppressive effect of accounting conservatism on abnormal audit fees is more significant when companies face high media coverage.Further analysis reveals that the negative effect of accounting conservatism on abnormal audit fees is more significant when the legal risk is high,the company’s financial position is poor and the auditor’s workload is under pressure.The innovations of this paper are as follows: Firstly,it provides an in-depth analysis of the underlying mechanism of the relationship between accounting conservatism and abnormal audit fees,and expands and improves the theoretical research on accounting conservatism from the perspective of abnormal audit fees.The current research on accounting conservatism and audit fees is mostly conducted in terms of overall audit fees,and it is more reasonable and realistic to measure the additional audit risks and audit costs brought to auditors by inadequate accounting conservatism in terms of abnormal audit fees.Secondly,external factors are included in the analysis framework to analyse whether and what impact media coverage has on the relationship between accounting conservatism and abnormal audit fees,in order to provide more empirical evidence on the governance role of media coverage.In addition to this,further analysis of the impact of legal risk,financial conditions and auditor workload pressures on the relationship will enrich the research on the impact of accounting conservatism on abnormal audit fees.