Audit Quality, Earnings Management and Firm Performance

Jinjing Li ()
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Jinjing Li: Nottingham University Business School, University of Nottingham

A chapter in Proceedings of the 2024 2nd International Conference on Economic Management, Financial Innovation and Public Service (EMFIPS 2024), 2025, pp 214-223 from Springer

Abstract: Abstract Audit quality has always been a focus of public and government, and high-quality audits which represent more reliable financial information is crucial for the development of firms. This paper uses Chinese A-share listed firms on Shanghai and Shenzhen Stock Exchange from 2012 to 2021 as the research sample, and adopts multilevel regression model to study the impact of audit quality on firm performance and its potential impact mechanism. This paper has three findings: (1) High-quality audits can improve firm performance; (2) High-quality audits has a positive impact on firms performance by limiting real earnings management; (3) In non-SOEs and firms with low ownership concentration, high-quality audits can promote firms performance more significantly. This paper supplements the relevant literature on the influence factors of firm performance, and can provide reference for firms and stakeholders in improving corporate governance and decisions.

Keywords: Audit quality; Earnings management; Firm performance; Corporate governance (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-706-9_20

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DOI: 10.2991/978-94-6463-706-9_20

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