Study On The Influence Of Corporate Financialization On Auditor Decision Making

In recent years,the entity enterprises have transferred a large amount of funds to the financial and real estate fields,resulting in the profit source of the entity enterprises to the financial and real estate fields,that is,gradually formed the situation of "enterprise financialization".At the micro practice level,the problems brought by enterprise financialization such as high operating risk,doubtful accounting,abnormal investment income,and violation of information disclosure have always been the focus of special attention of China Securities Regulatory Commission and CPA.When the auditor perceives that the audit risk of the audited entity increases,it is bound to take certain countermeasures,such as issuing unclean audit opinions and charging audit risk premium.Therefore,the impact of corporate financialization on auditor’s risk perception and how it affects auditor’s decision making has become the focus of this paper.According to company data listed in Shanghai and Shenzhen A from 2011 to 2021,this paper first examines the relationship between corporate financialization and auditor decision making,and discusses the moderating effects of auditor industry expertise and marketization degree on the relationship between corporate financialization and auditor decision making from the perspective of auditor and external environment.Finally,we examine the mediating effect of corporate financialization on auditor decisions,and analyze whether there are differences in the influence of corporate financialization behavior on auditor decisions with different property rights and different quality of internal control.The empirical results show that the financial behavior of the audited entity will increase the audit cost or increase the probability of auditors issuing non-standard audit opinions.Auditors with industry expertise strengthen the influence of corporate financialization on auditor decisions through strong risk identification ability;However,a higher degree of marketization in the location of the audited entity can mitigate the impact of corporate financialization on auditor decisions.Further research shows that firm financialization affects auditor decisions through agency costs and operational risks.Heterogeneity test shows that,compared with non-state-owned enterprises,auditors are more inclined to reduce risks by increasing audit fees for state-owned auditees.Compared with the enterprises with poor internal control,effective internal control can weaken the auditor’s risk perception of enterprise financialization,thus reducing audit costs and improving the probability of issuing clean audit opinions.According to the research results,this paper puts forward the following suggestions: first,enterprises should allocate financial assets reasonably and concentrate on developing the main business;Second,auditors should strengthen professional knowledge training,enhance professional skills and professional ethics;Third,the government should strengthen the supervision of the financialization of real enterprises and strictly control the share of financial assets held by real enterprises.