Corporate digital washing and auditor choice: evidence from China

Digital washing refers to the communication practice of disclosing misleading information and exaggerating a company's digital transformation efforts beyond its actual capabilities. This research employs a comprehensive framework that incorporates both digital fancy marketing and actual digitalization progress to quantify corporate digital washing and examine its impact on the selection of auditors. The empirical results indicate that firms engaging in higher degrees of digital washing are less likely to appoint high-quality auditors. Mechanism analyses suggest that adopting a digital washing strategy enables a firm to secure favourable audit opinions.