Corporate Digital Arming and Auditor Response Behavior ——The moderating effect of Labor Factors on the Supply and Demand Sides

Abstract: While the development of the digital economy has brought about efficiency gains in economic activities, it has also created a "digital divide" and increased information asymmetry among market participants. Existing research on enterprise digitization focuses on the positive consequences from the perspective of the enterprise, but pays little attention to how people outside the enterprise perceive the enterprise's digital behavior. This paper is based on the supply side of auditing services, the study of the auditor's response to the digital behavior of enterprises, supply and demand side of the labor factors how to affect the response process, the study found that: (1) the digital transformation behavior of enterprises to form a kind of "armed", the auditor is facing a greater informational disadvantage, increasing the difficulty of the auditor's auditing and audit failure risk, the auditor thus requires a higher level of information asymmetry between market participants. The study finds that: (1) the digital transformation behavior of enterprises creates an "armament" and the auditor faces a greater information disadvantage, which increases the auditor's audit difficulty and the risk of audit failure, and thus the auditor demands a higher risk premium; (2) the auditor's industry expertise and the manager's technological background can help overcome the information disadvantage. This paper shows that: the auditor is more passive in the face of corporate digital behavior, the auditor has the industry expertise to overcome the passive situation, the technical background of the managers in the audit process to play an active "communicator" rather than the "hidden" role of information. This paper provides an overview of the digital transformation of the enterprise. This paper provides a new perspective on the digital transformation behavior of enterprises on the one hand, and enriches the research on auditor behavior in the digital economy on the other.