IDEAS home Printed from https://ideas.repec.org/a/wly/intsec/v20y2025i2p153-161.html

Does National Auditing Improve Local Fiscal Transparency? Evidence From China

Author

Listed:
  • Zhuo Chen
  • Mingzhi Hu

Abstract

This paper examines whether and how national audits affect local fiscal transparency in China. Using panel data from 30 provinces between 2009 and 2018, we find that national audits significantly improve local fiscal transparency after controlling for various economic and institutional factors. The effect of national audits on fiscal transparency varies significantly by region, which is stronger and statistically significant in eastern regions and in regions with high land finance, while not significant in central‐western regions or in those with low land finance. Furthermore, the positive impact is primarily driven by the disclosure and defense functions. These findings suggest that national audits are valuable for improving fiscal transparency, but their effectiveness varies depending on regional economic development and local government financing mechanisms.

Suggested Citation

  • Zhuo Chen & Mingzhi Hu, 2025. "Does National Auditing Improve Local Fiscal Transparency? Evidence From China," International Studies of Economics, John Wiley & Sons, vol. 20(2), pages 153-161, June.
    • Handle: RePEc:wly:intsec:v:20:y:2025:i:2:p:153-161
    DOI: 10.1002/ise3.70007
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/ise3.70007
    Download Restriction: no
    File URL: https://libkey.io/10.1002/ise3.70007?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Mohammad J. Abdolmohammadi & Robert R. Tucker, 2002. "The Influence of Accounting and Auditing on a Country's Economic Development," Review of Accounting and Finance, Emerald Group Publishing Limited, vol. 1(3), pages 42-53, March.
    2. Lisic, Ling Lei & Silveri, Sabatino (Dino) & Song, Yanheng & Wang, Kun, 2015. "Accounting fraud, auditing, and the role of government sanctions in China," Journal of Business Research, Elsevier, vol. 68(6), pages 1186-1195.
    3. Sri Rahayu & Yudi & Rahayu, 2020. "Internal auditors role indicators and their support of good governance," Cogent Business & Management, Taylor & Francis Journals, vol. 7(1), pages 1751020-175, January.
    4. Yunyang Ji & Xiaoxin Guo & Shihu Zhong & Lina Wu, 2020. "Land Financialization, Uncoordinated Development of Population Urbanization and Land Urbanization, and Economic Growth: Evidence from China," Land, MDPI, vol. 9(12), pages 1-22, November.
    5. Lino, André Feliciano & Azevedo, Ricardo Rocha de & Aquino, André Carlos Busanelli de & Steccolini, Ileana, 2022. "Fighting or supporting corruption? The role of public sector audit organizations in Brazil," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 83(C).
    6. Justin Logie & Warren Maroun, 2021. "Evaluating Audit Quality Using the Results of Inspection Processes Performed by an Independent Regulator," Australian Accounting Review, CPA Australia, vol. 31(2), pages 128-149, June.
    7. Jenny Stewart & Nava Subramaniam, 2010. "Internal audit independence and objectivity: emerging research opportunities," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 25(4), pages 328-360, April.
    8. Liang, Wenquan & Lu, Ming & Zhang, Hang, 2016. "Housing prices raise wages: Estimating the unexpected effects of land supply regulation in China," Journal of Housing Economics, Elsevier, vol. 33(C), pages 70-81.
    9. Huishui Su & Yu Lu & Oleksii Lyulyov & Tetyana Pimonenko, 2023. "Good Governance within Public Participation and National Audit for Reducing Corruption," Sustainability, MDPI, vol. 15(9), pages 1-17, April.
    10. repec:eme:maj000:02686901011034162 is not listed on IDEAS
    11. Chen, Jie & Wu, Fulong, 2022. "Housing and land financialization under the state ownership of land in China," Land Use Policy, Elsevier, vol. 112(C).
    12. Quick, Reiner & Baker, R. & Mikol, A., 2001. "Regulation of the Statutory Auditor in the European Union: A Comparative Survey of the United Kingdom, France and Germany," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 67744, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    13. Jenny Stewart & Nava Subramaniam, 2010. "Internal audit independence and objectivity: emerging research opportunities," Managerial Auditing Journal, Emerald Group Publishing, vol. 25(4), pages 328-360, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ayman Abdelrahim & Husam-Aldin N. Al-Malkawi, 2025. "Examining the moderating role of senior management support in internal audit effectiveness: evidence from GCC region," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 22(3), pages 722-744, September.
    2. Qiyao Zhang & Bowen Li & Zhongkuan Sun & Beijia Xiong & Fengchen Wang & Chengming Li, 2025. "How Does Land Financialization Affect Urban Ecosystem Resilience Through Resource Reallocation?," Land, MDPI, vol. 14(9), pages 1-30, September.
    3. Stéphane Lhuillery & Marion Tellechea & Stéphanie Thiéry, 2023. "Innovation in lieu of compliance: Internal audit departments’ standardized and non-standardized knowledge sources," Post-Print hal-04056227, HAL.
    4. Cecilia Langella & Ilaria Elisa Vannini & Milena Marciacano & Niccol? Persiani, 2022. "L?Internal Auditing nel Servizio Sanitario Nazionale: l?esperienza della Regione Veneto e della Regione Emilia-Romagna," MECOSAN, FrancoAngeli Editore, vol. 2022(123), pages 7-27.
    5. Jia Li & Rachel Tochen & Yaning Dong & Zhuoran Ren, 2022. "Debt-Driven Property Boom, Land-Based Financing and Trends of Housing Financialization: Evidence from China," Land, MDPI, vol. 11(11), pages 1-23, November.
    6. Yang, Junhua & Li, Ying & Zheng, Yu & Zhu, Mengqi & Shahab, Yasir & Ye, Chengang, 2025. "External audit quality and green innovation: Does environmental information disclosure matter?," International Review of Financial Analysis, Elsevier, vol. 103(C).
    7. Scott Rozelle & Yiran Xia & Dimitris Friesen & Bronson Vanderjack & Nourya Cohen, 2020. "Correction to: Moving Beyond Lewis: Employment and Wage Trends in China’s High- and Low-Skilled Industries and the Emergence of an Era of Polarization," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 62(4), pages 774-775, December.
    8. Li, Chunyu & Lou, Chenxin & Luo, Dan & Xing, Kai, 2021. "Chinese corporate distress prediction using LASSO: The role of earnings management," International Review of Financial Analysis, Elsevier, vol. 76(C).
    9. Pinto, Inês & Morais, Ana Isabel & Quick, Reiner, 2020. "The impact of the precision of accounting standards on the expanded auditor’s report in the European Union," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 40(C).
    10. Chen, Kunqiu & Long, Hualou & Liao, Liuwen & Tu, Shuangshuang & Li, Tingting, 2020. "Land use transitions and urban-rural integrated development: Theoretical framework and China’s evidence," Land Use Policy, Elsevier, vol. 92(C).
    11. Han, Wenjing & Zhang, Xiaoling & Zheng, Xian, 2020. "Land use regulation and urban land value: Evidence from China," Land Use Policy, Elsevier, vol. 92(C).
    12. Wu, Fang & Cao, June & Zhang, Xiaosan, 2023. "Do non-executive employees matter in curbing corporate financial fraud?," Journal of Business Research, Elsevier, vol. 163(C).
    13. Alan Bandeira Pinheiro & Gabriele Lopes & Gabriel Gusso Mazzo, 2025. "Shining light on the shadows: The role of corruption control in the relationship between board composition and SDG disclosure," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(2), pages 1495-1507, March.
    14. Yan Yan & Hui Liu & Ningcheng Wang & Shenjun Yao, 2021. "How Does Low-Density Urbanization Reduce the Financial Sustainability of Chinese Cities? A Debt Perspective," Land, MDPI, vol. 10(9), pages 1-18, September.
    15. Liu, Ruiming & Yan, Haosheng & Zhang, Zebang, 2024. "Does historic preservation affect firms' output? Evidence from the awarding of the Historic City title in China," China Economic Review, Elsevier, vol. 85(C).
    16. Tiago Cardao-Pito, 2023. "How to identify norms, laws, and regulations that facilitate illicit financial flows and related financial crimes," Journal of Money Laundering Control, Emerald Group Publishing Limited, vol. 27(4), pages 674-686, August.
    17. Carlo Regoliosi & Alessandro d’Eri, 2014. "“Good” corporate governance and the quality of internal auditing departments in Italian listed firms. An exploratory investigation in Italian listed firms," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(3), pages 891-920, August.
    18. Zhe Zhao & Pengyu Peng & Fan Zhang & Jiayin Wang & Hongxuan Li, 2022. "The Impact of the Urbanization Process on Agricultural Technical Efficiency in Northeast China," Sustainability, MDPI, vol. 14(19), pages 1-20, September.
    19. Isabel Z. Wang & Neil Fargher, 2017. "The effects of tone at the top and coordination with external auditors on internal auditors’ fraud risk assessments," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 57(4), pages 1177-1202, December.
    20. Chang Liu & Wei Xiong, 2018. "China's Real Estate Market," NBER Working Papers 25297, National Bureau of Economic Research, Inc.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:intsec:v:20:y:2025:i:2:p:153-161. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.