Does media exposure affect financial reporting quality through auditors?

Steven F. Cahan, Chen Chen, Rencheng Wang

Research output: Contribution to journalArticleResearchpeer-review

11 Citations (Scopus)


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.

Original languageEnglish
Pages (from-to)750-775
Number of pages26
JournalJournal of Accounting, Auditing and Finance
Issue number4
Publication statusPublished - Oct 2021


  • auditor
  • business risk
  • financial reporting quality
  • media

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