Administrative audit regulation and the quality of accounting information: Evidence from China securities regulatory commission’s random inspection system

Hui Chen, Wanting Zhuang, Zijia Wang and Anzhe Zhou

Research in International Business and Finance, 2024, vol. 71, issue C

Abstract: Based on the “double random” inspection system implemented by the China Securities Regulatory Commission (CSRC) on accounting firms, our study uses staggered DID method to examine the effect of administrative audit regulation on the quality of corporate accounting information. The results suggest: (1) The administrative audit regulation can effectively improve corporate accounting information quality; (2) The mechanism test reveals that the administrative audit regulation improves the quality of accounting information by improving internal control; (3) Further study reveals that the governance effect of the administrative audit regulation is more pronounced for firms with non-Big four auditing, high risk of misstatement and more agency costs. Our study investigates the governance effect of the CSRC’s random inspection system on the quality of corporate accounting information, providing theoretical and empirical evidence for the effectiveness of administrative audit supervision from the perspective of corporate accounting information system.

Keywords: Administrative audit regulation; random inspection; quality of accounting information; internal control (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:71:y:2024:i:c:s0275531924002952

DOI: 10.1016/j.ribaf.2024.102502

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