Enterprise Digital Investment and Auditor Choice: An Empirical Study Based on Chinese Listed Enterprises

Digital investment determines enterprises’ internal resource structure and drives them from traditional to digital business models, increasing the difficulty and risk of external audits. This study empirically examines the impact of an enterprise’s digital investment on auditor choice to clarify the impact of digital businesses on external audits. We find a positive association between enterprises’ digital investment and their propensity to hire Big Four auditors, suggesting that digital investment leads to an increased demand for high-quality audit services from enterprises. This positive effect is more pronounced in enterprises with more complex businesses, high degrees of earnings management, and high degrees of the digital economy in their location. Additional analysis suggests that enterprises with digital investments that hire Big Four auditors have lower audit delay and higher audit quality. The findings provide empirical evidence for improving subsequent digital transformation and audit quality in emerging markets.