Does news media affect audit quality? Evidence from variation in the contagion effect

• 成果类型: Article; Early Access
• 署名作者: Cowle, Elizabeth N.; Rawson, Caleb; Rowe, Stephen P.
• 署名单位: Colorado State University System; Colorado State University Fort Collins; University of Arkansas System; University of Arkansas Fayetteville
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653; 1573-7136
• DOI: 10.1007/s11142-026-09986-9
• 发表日期: 2026-08-20
• 关键词: auditor reputation; Media coverage; Big four; contagion; Audit quality; audit offices; L82; M41; M42; product recalls; coverage; PRIVATE; press; RISK

摘要

We examine whether negative news media coverage of peer audit firms affects audit quality by mitigating the contagion effect of low-quality audits. We find that when a company issues a restatement, other companies served by the same audit office or within the same city are more likely to subsequently issue a restatement. However, we find that higher negative peer firm news coverage mitigates this contagion effect, particularly when auditors have greater opportunity to improve audit quality (smaller companies) and when media attention amplifies reputational pressures (higher local news intensity). Our findings extend to litigation-related news but not to nonnegative news, suggesting that auditors respond to perceived reputational threats stemming from negative news. Additionally, negative peer news increases auditor attention, consistent with an auditor supply-side effect that improves audit quality. Our findings highlight the media's role as an informal oversight mechanism.