Publication Type

Journal Article

Version

acceptedVersion

Publication Date

7-2020

Abstract

We examine whether the media has an indirect corporate governance effect on financial reporting quality (FRQ) that operates through auditors. This occurs because greater media coverage can magnify an auditor's business risk by exposing the auditor to more potential litigation and reputation damage if an audit failure occurs. We use a path analysis to examine the direct and indirect channels of media corporate governance. We find a positive association between media coverage and FRQ that is mediated by audit fees, and the results are stronger for firms with greater incentives to engage in earnings manipulation. In contrast, we find no evidence that the media has a direct corporate governance effect on FRQ. Our results show how the media's corporate governance reach can be extended by auditors who care about how media coverage impacts their risk level.

Keywords

media, auditor, business risk, financial reporting quality

Discipline

Accounting | Corporate Finance

Research Areas

Corporate Governance, Auditing and Risk Management

Publication

Journal of Accounting, Auditing and Finance

First Page

1

Last Page

26

ISSN

0148-558X

Identifier

10.1177/0148558X20936083

Publisher

SAGE Publications (UK and US)

Additional URL

https://doi.org/10.1177/0148558X20936083

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