Audit Relationship Mismatch And Enterprise Investment Efficiency

The 14 th Five-Year Plan and the 2035 Vision Outline state that development is the foundation and key to solving all problems in China.We must adhere to the new vision for development,apply it throughout the whole process of development and in all areas in a complete,accurate and comprehensive way,and guide all sectors to focus on improving the quality and efficiency of development so as to fully tap the potential for growth.Among them,expanding effective investment and improving investment efficiency are the key components to achieve a high level of dynamic balance between supply and demand.As an important participant in market economic activities,enterprises optimize investment structure is the main keynote of high-quality development,and the optimization of enterprise investment structure and the improvement of investment effectiveness are inseparable from a good external supervision environment.As an important "spokesperson" for the effective play of external supervision mechanism,auditors can transmit information to stakeholders through audit reports,which is conducive to reducing agency costs and improving corporate information transparency.However,the frequent audit failure cases at present arouse the thinking of the audit relationship.In order to explore the game between internal governance mechanism and external supervision force implied by client-auditor relationship,this paper analyzes the influence of audit relationship mismatch on enterprise investment efficiency from the perspective of audit relationship mismatch.The results show that there are two kinds of audit mismatch: upward mismatch and downward mismatch.The upward mismatch enhances the investment efficiency of enterprises,while the downward mismatch reduces the investment efficiency of enterprises,and a good governance environment helps to improve the influence of downward mismatch on investment efficiency.Further analysis shows that the upward mismatch is mainly due to the supervision and governance mechanism to reduce the excessive investment of enterprises,so as to improve the investment efficiency.However,downward mismatch leads to lower investment efficiency through signal transmission mechanism.The relationship between client and auditor implies the game between internal governance mechanism and external supervision force.This paper uses the number of samples of listed companies in Shanghai and Shenzhen from 2016 to 2020 to investigate the auditors’ impact on enterprise investment efficiency.The results show that the audit mismatch is divided into two types: upward mismatch and downward mismatch.The upward mismatch is positively correlated with the investment efficiency of enterprises,while the downward mismatch is negatively correlated with the investment efficiency of enterprises.The influence of mismatch relationship on investment efficiency will be weakened with the improvement of internal and external governance environment.Further analysis revealed that the client-auditor upward mismatches reduce the company’s excessive investment by Supervision and governance channels,thereby enhancing investment efficiency;and the client-auditor downward mismatches reduce enterprise investment efficiency through signal delivery channels.This study enriches the relevant literature on the economic consequences of audit relationship mismatch,helps to clarify the interaction between external supervision and enterprise behavior,which has a certain practical significance for promoting the benign circulation of the relationship between customers and auditors.