Product market power and audit report lag: evidence from China

This study aims to explore the relationship between product market power and audit report lag. By analyzing data for a sample of Chinese A-share listed companies from 2001 to 2021, we provide evidence that a company's product market power has a significant negative association with audit delays. Mediation analysis reveals that product market power reduces audit delays through higher financial reporting quality and better internal control. We further find that the negative relationship between product market power and audit delays is significant for the non-high-tech enterprises only. In addition, we also find that at the industry level, more competitive industries are associated with longer audit delays. Overall, our study provides evidence that the information related to company-level competition conveys valuable information to auditors.