Audit centralization and audit quality: Evidence from Chinese cities

• 成果类型: Article
• 署名作者: Chu, Jian; Fisman, Raymond; Wang, Yongxiang; Ye, Maoliang
• 署名单位: Nanjing University; Boston University; Shanghai Jiao Tong University; Southern University of Science & Technology
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101; 1879-1980
• DOI: 10.1016/j.jacceco.2026.101865
• 发表日期: 2026-08
• 页码: 101865
• 关键词: decentralization; Audit oversight; CHINA; decentralization; CORRUPTION; ACCOUNTABILITY; selection

摘要

Audit design invokes a tradeoff between a monitor's local knowledge and their independence from influence. We study this tradeoff in the context of a pilot program in six Chinese provinces in 2016, in which provincial governments were given control over budgeting and personnel decisions for city audits. Using a difference-in-differences framework we show that, compared to non-pilot provinces, centralization increases detection of suspicious expenditures by over 50%. These improvements occur also in cities with auditors appointed pre-2016, suggesting that stronger incentives and greater resources rather than auditor selection explain the improvements. Consistent with this interpretation, we find that financial (but not human) resources devoted to city audits increase with centralization. Further results show that centralization's benefits are strongest in provinces that centralized audit office financing as part of the reform - particularly in poorer cities - suggesting a role for resources in improved performance.