The Role of the Media in Corporate Governance: Do the Media Influence Audit Quality?
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Abstract
To explore the role of mass media in the audit quality, this study examines the impact of negative breaking news in the mass media on the audit quality after the 2018 financial statement announcement. Total are 1,652 observations in 2019. Within these, 61 companies were audited by the auditor with breaking bad news. The study investigates and shows that audit quality has significant improvement for the firms audited by the auditors previously with negative breaking news. These results are robust in several sensitivity tests. Thus, this research supports that the attention of mass media has an impact on audit quality and strengthens the corporate governance effect.
