CHINESE GOVERNMENT AUDITING AND ECONOMIC GROWTH: THE MEDIATING EFFECT OF CORRUPTION

Purpose: This study aims to evaluate the effect of government audits in promoting economic growth and curbing corruption in China. Design/Methodology/Approach: This study utilises data from 30 provinces in China from 2010 to 2021, employing Stata data analysis software. This study uses a double-effect multiple regression model to investigate the relationship between government audits and economic growth, as well as the mediating role of corruption. Research Results: Data regression shows that the implementation stage and the accountability and punishment stage of the audit have a significant positive relationship with economic growth. In addition, corruption and economic development are both significantly negatively related. It is worth noting that the implementation stage has a non-significant positive relationship with corruption, resulting in corruption not having a mediating effect between the two at this stage. Fortunately, the accountability and punishment stage of audit has a significant negative relationship with corruption, which confirms that corruption has a partial mediating effect between the two at this stage. Conclusion: The results indicate that although the audit system has been in place for decades, the ability of government audits to curb corruption is limited during the implementation stage compared to the accountability and punishment stage. Audit cannot promote economic growth by controlling corruption at this stage. Practical significance: The results of this study provide essential guidance and suggestions for the formulation of government audit and anti-corruption policies and prove that it is necessary to formulate more detailed and targeted corruption governance policies. This study recommends re-evaluating the implementation role of government audits and exploring stricter supervision mechanisms and more effective implementation mechanisms.