The aggregate release of third-party online sales data and audit quality improvement

Corporate online sales data are embedded with high informational value. Focusing on auditors who are concerned about information quality, this paper systematically tests the governance effect of releasing third-party online sales data on audit quality. Using the first aggregate release of online sales data in 2018 as an exogenous shock, we use the difference-in-differences model and empirically demonstrate that the audit quality of firms with released online sales data improves significantly after 2018. Subsequent analyses demonstrate that releasing online sales data has a governance effect by improving internal control quality, audit efficiency and audit prudence. The findings demonstrate that the aggregate release of third-party online sales data could have positive economic consequences.