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Based on the data of Chinese state-owned firms from 2011 to 2024, this paper empirically examines the impact effect and mechanism of artificial intelligence (AI) application in state-owned firms on the audit quality. The research finds that the application of AI technology in state-owned firms significantly improves the audit quality. Mechanism tests show that AI technology improves audit quality through the paths of enhancing internal controls, reducing earnings management, and lowering information asymmetry and risk premiums. Heterogeneity analysis indicates that the firm technological attributes, business complexity, government digital supervision and type of accounting firms will lead to different impact effects. Our findings offer new theoretical insights for companies seeking to deepen their application of AI technologies and improve audit effectiveness, and provide valuable guidance for market participants and regulators.
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song et al. (2026) studied this question.
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