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Can legal construction in the securities market strengthen corporate audit quality: Evidence from the implementation of new securities act

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  • Chen, Jierong
  • Gou, Zhoumin
  • Zhao, Kunyu

Abstract

Improving the legal structure of China's securities market depends on revising the Securities Law. Using data from A-share listed companies from 2015 to 2022, this paper uses the difference-in-differences (DID) approach to investigate the effect of implementing the New Securities Law on the audit quality of companies. The revelation shows how much the New Securities Law can improve the caliber of company audits. Furthermore, improving audit fees, risk premiums, and media concentration yields positive results. Moreover, the degree of internal control and ownership of companies has different mediation consequences. The efficiency of the recently adopted Securities Law in controlling the conduct of auditors is assessed in this paper. The study results have significant practical relevance for efficiently implementing the new Securities Law, extending the market structure for auditing services, properly preventing and regulating auditing risks, and increasing the efficiency of the capital market.

Suggested Citation

  • Chen, Jierong & Gou, Zhoumin & Zhao, Kunyu, 2024. "Can legal construction in the securities market strengthen corporate audit quality: Evidence from the implementation of new securities act," International Review of Financial Analysis, Elsevier, vol. 96(PA).
    • Handle: RePEc:eee:finana:v:96:y:2024:i:pa:s1057521924004708
    DOI: 10.1016/j.irfa.2024.103538
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    References listed on IDEAS

    as
    1. Anh Viet Pham & Mia Hang Pham & Cameron Truong, 2023. "Audit Quality: An Analysis of Audit Partner Cultural Proximity to Client Executives," European Accounting Review, Taylor & Francis Journals, vol. 32(4), pages 841-873, August.
    2. Yunlin Tian & Xiaofei Pan, 2024. "Green Finance Policy, Financial Risk, and Audit Quality: Evidence from China," European Accounting Review, Taylor & Francis Journals, vol. 33(2), pages 589-615, March.
    3. Markus Widmann & Florian Follert & Matthias Wolz, 2021. "What is it going to cost? Empirical evidence from a systematic literature review of audit fee determinants," Management Review Quarterly, Springer, vol. 71(2), pages 455-489, April.
    Full references (including those not matched with items on IDEAS)

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