Audit Quality and Corporate Innovation
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In the background of implementation the strategy of innovation-driven development, this paper investigates the impact of audit quality on corporate innovation. Using applications of invention patents as a proxy of corporate innovation, we find that audit quality (measured by international Big Four and eight largest audit firms, respectively) significantly enhance the corporate innovation; the positive relation between audit quality and corporate innovation will be more pronounced in firms facing higher agency cost or financing constrains; and this effect will be mitigated by analyst coverage and media supervision.
Audit Quality, Corporate Governance, Agency Cost, Analyst Coverage, Media Coverage.