The negative effect of regional banking competition on audit quality: evidence from China

Chen, Yuran, Duan, Dongni, Mao, Yidan and Zhang, Lingli (2024) The negative effect of regional banking competition on audit quality: evidence from China. Emerging Markets Finance and Trade, 60 (14). 3177 - 3200. ISSN 1540-496X

Text (The Negative Effect of Regional Banking Competition on Audit Quality Evidence from China) - Accepted Version Repository staff only until 14 November 2025. Available under License Creative Commons Attribution Non-commercial. Download (1MB)

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Abstract

Using Chinese A-share listed data from 2007 to 2020, we reveal that increased competition in the banking system impairs the audit quality of banks’ credit clients, which is attributed to the loss of bank supervision. For firms with poor corporate governance or information quality, firms that hire auditors with low independence or high catering motivation, or firms in an immature external environment, such negative effect is more prominent. Furthermore, we indicate that firms are prone to shop for favorable audit opinions under high banking competition. Overall, we illustrate the negative effect of banking competition on auditors and provide meaningful implications.

Item Type:	Article
Official URL:	https://www.tandfonline.com/journals/mree20
Additional Information:	© 2024 Taylor & Francis Group, LLC
Divisions:	Accounting
Subjects:	H Social Sciences > HG Finance H Social Sciences > HF Commerce > HF5601 Accounting
JEL classification:	M - Business Administration and Business Economics; Marketing; Accounting > M4 - Accounting and Auditing > M42 - Auditing G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
Date Deposited:	28 May 2024 09:06
Last Modified:	12 Dec 2024 04:18
URI:	http://eprints.lse.ac.uk/id/eprint/123656

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