“Internet+”, Entrepreneurs’ Investment and Audit Fee

In the Internet era, the real economy and the 
internet are deeply integrated, and the “Internet+” business model comes into 
being. Under the modern risk-oriented theory, the risk of customer material 
misstatement becomes an important factor that auditors focus on, and also 
becomes the starting point of audit execution and audit pricing. Investment 
behavior is certainly a factor that auditors need to mainly focus on when 
assessing the risk of material misstatement. Based on the background of the 
enterprise’s implementation of the internet business model and drawing on the 
existing research results at home and abroad, this paper takes the 
non-state-owned listed companies in 2013-2018 as the research sample, and uses 
the modern audit risk-oriented theory. The investment behavior is divided into 
two parts—the financial investment and long-term equity 
investment to research the impact of the two types of investment on the audit 
fees from the theoretical and empirical perspectives. Besides, we also analyze 
the adjustment effect of “Internet+” on the relationship between investment 
behavior and audit fees. Studies have shown that the level of enterprises’ 
investment will significantly increase audit costs. Further research shows that 
“Internet+” strengthens the relationship between corporate investment behavior 
and audit fees.


Introduction
In the 2019 government work report in China, the concept of "Internet+" was repeatedly mentioned, and references such as "Internet+ education", "Internet+ supervision" and "Internet+ supervision" appeared in the report for the first time. At the same time, the subject of "Internet+ real economy" has also received The competition of the traditional real economy has intensified, and the industry has undergone rapid iterative changes. As business civilization enters the same stage of competition between industrial capital and financial capital, entrepreneurs are facing an era of rapid and iterative changes in various industries.
It is necessary to understand the industry under the guidance of capital, promote the industry by means of investment, and promote the appreciation of wealth.
Entrepreneurs who know how to invest can go through cycles and protect wealth. Because once industrial capital is combined with financial capital, financial capital can amplify the power of the industry when the industry is good, and when the industrial cycle rotates, it can allocate the wealth to the best position. Therefore, entrepreneurs will not only focus on production, operation and innovation, but also gradually focus on investment and gradually shift their functions to investors. The Chinese well-known financial author Wu first proposed the concept of "entrepreneur investors" in 2017, which is an integrated role of entrepreneurs and investors, with distinctive amphibious characteristics, living in the real industry to maintain sustainable development, and on the other hand living in capital market, to allow our wealth to increase in value during the movement. "Entrepreneur investors" is a more in line with China's business conditions and future survival.
Based on the background of the implementation of the internet business model by private enterprises, this paper starts from the audit risk-oriented theory and draws on existing research results at home and abroad. The entrepreneur's investment behavior is divided into two parts: financial instrument investment and long-term equity investment. This perspective studies the impact of two types of investment behavior on audit fee. The research in this paper mainly involves the following two aspects. First, from the perspective of equity investment and financial instrument investment, I explore the impact of entrepreneurial investment behavior on audit costs. Second, I explore the role of "In-ternet+" in regulating the relationship between entrepreneurs' investment behavior and audit costs.

Research on "Internet+"
In the theoretical research community, "Internet+" was considered as a business model. The earliest interpretation of the business model comes from Timmers, which considers the business model to be an "architecture of products", services, and information flows [1]. And after that, Mgretta and Rappa have different definitions of the business model. Mgretta considers the business model to be a story that explains how a manufacturer operates [2]. Rappa believes that the most basic meaning of a business model is the method of doing business [3].
They all treat the business model as a fixed, static abstract system, and it is limited to seeing it as improving the functions of the enterprise. In the era of the Internet, the interconnectedness of the internet has broken the original business barriers and corporate boundaries, and the understanding of business models has also been disrupted. It has begun to focus on interactions with customers, key stakeholders of the enterprise. Shafer et al. believes that the elements of a business model include strategic choice, value network, value creation, and value capture [4]. The customer value is determined during strategic choice, and the relationship between the enterprise and the user is emphasized in the value network element. Johnson [8]. It is not difficult to see that the business model in the internet era pays more attention to the interaction between users and enterprises, and the business model has become a dynamic system. The Internet business model mainly reflects the following feature: 1) It pays more attention to communication and interaction with customers.
Customer orientation is the core of the internet business model. From the perspective of the enterprise, the internet's disintermediation function enables the market to perceive the direct interaction between the enterprise and the consumer [9], so it can better understand the market needs of consumers through the use of big data and cloud computing and other technical methods, accurately calculate the consumption habits and characteristics of each individual, so as to meet the different needs of different individuals [10]. From the perspective of customers, the internet has solved the problem of information asymmetry in the traditional market. Customers can get more information about products, and they have more and more autonomy in product selection.
2) It reduces transaction costs and increase corporate profits. Since the cost of information transmission is almost zero, the marginal cost of each additional product is very low, and even close to zero [8]. Involving a large number of users helps the company to create products that meet the needs of users, which also makes the company reduce the cost of value creation while increasing user satisfaction [11].
3) It promotes the establishment of a good corporate ecology, and helps the company to maintain a dynamic competitive advantage. The internet-based business model is also an innovative economy. By connecting everything, it can realize the integration and innovation of the new generation of information technology and traditional industries, and thereby promote the improvement of corporate innovation capabilities [12]; "Internet+" can also easily attract all kinds of talents (including corporate customers) to participate and promote innovation [10]. Yan Haichao and Yang Bowen believe that the function of "In-ternet+" is "Internet+" and "+Internet" [13]. After the integration of the internet with traditional industries, through cross-industry integration and organizational innovation, it serves as a technological form and mode of thinking. In a nutshell, "Internet+" will promote the improvement of corporate innovation capabilities from the perspectives of information, technology (software and hardware), human resources, resource integration, and the ecosystem [9] [14].
In empirical research community, Chinese researchers mainly focus on the economic consequences of internet business models, including the impact of "Internet+" on corporate performance, audit costs, and corporate value. difference between a business model and a strategy is that the business model is "value creation" oriented and the strategy is "building a competitive advantage" oriented [15]. The difference between the two is not large. At present, most for-  [16]. Regardless of whether the value activity is implemented before or after strategy implementation, the internet business model can be understood as the strategic behavior of the enterprise [17], and it will inevitably have an impact on corporate performance and value performance. Wan Xing and Yang Jing researched 1918 theaters on the O2O platform and found that choosing a third-party Internet platform can significantly improve theater performance [18]. By using a large sample of traditional enterprises, Yang Deming and Liu Yongwen found that "In-ternet+" promoted the improvement of corporate performance through the mediating variable of differentiation [19]. Compared with companies that did not implement "Internet+", companies implementing "Internet+" increased their average earnings per share by approximately 31%, while return on assets increased by an average of approximately 24%.
2) "Internet+" and market performance. Research by Yang Deming and Lu Ming found that the implementation of Internet business models by listed companies will expose auditors to higher risks [20]. Therefore, auditors need to increase audit costs and increase audit procedures. Therefore, the implementation of internet business models by listed companies will significantly improve audit costs. Tan  can improve the accuracy of investor information acquisition information and thereby improve the efficiency of market information [21]. Yang Deming and Bi Jianqin conducted empirical research based on the theory of asset specificity, and found that with the implementation of the "Internet+", the company's external investment has increased significantly, the company's internal investment will significantly increase the company's valuation, and the implementation of "Internet+" will strengthen the positive impact of corporate external investment on company valuation [22].

Hypothesis Development
Audit pricing fully reflects the audit risks stemming from the company's internal governance [23]. According to the audit risk model, audit risks can be divided into material misstatement risks and inspection risks. Among them, the level of material misstatement risks = inherent risks*control risks. The inherent thinking of modern risk-oriented auditing is that any auditing business must control the audit risk to an acceptable level of risk, or determine the highest risk links and departments through internal control testing and other methods [24]. In the following, we will analyze the impact of entrepreneurial investment behavior on audit costs from two aspects, inherent risk and control risk. Inherent risk refers to that without considering the internal control structure, due to internal factors and the influence of the objective environment, the possi-bility of major errors in the company's accounts, transaction categories, and overall financial statements. Bloomfield pointed out that when auditing account balances, auditors must first assess the inherent risk that account balances are misreported [25]. The results of investment activities are mainly reflected in the increased frequency and scale of investment activities (investment in financial assets, acquisition of mergers and subsidiaries, etc.). The impact of these investment activities on inherent risks is mainly reflected in the following three aspects: 1) Investment activities increase business complexity. After the enterprise implements investment behavior, more business and participants enter the enterprise, which makes the industry situation more complex, business model more diverse, and the business uncertainty of the enterprise increase; 2) Some investment activities hide serious agency conflicts, the complexity of investment activities provides a large space for the use of statements to decorate or financial fraud, this means earnings management is more common, and operating and financial risks are relatively large [26]; 3) The judgement of investment statements are subjective. For example, transactional financial assets and available-for-sale financial assets held by an enterprise are measured at cost when acquired, and are subsequently measured at fair value at the end of the period. However, changes in the fair value of tradable financial assets are included in the current profit and loss, while changes in the fair value of available-for-sale financial assets are included in owner's equity. There is the possibility of potentially significant misstatement. Auditors need to make more efforts, such as appointing more experienced auditors, expanding the scope of substantive testing, and performing.
Control risk refers to the possibility of misstatement of a certain type of transaction, account balance, or disclosure. The misstatement alone or in conjunction with other misstatements is significant, but is not detected and corrected by internal control in time. We believe that entrepreneurial investment behavior will increase the control risk of enterprises. This is because enterprises in rapid changes will have certain changes in their organizational forms, business operations, and personnel structure, and their business diversity and complexity will be corresponding. The improvement of the local environment requires that the internal control of the enterprise be adjusted and updated accordingly to the new environment and situation [27]. After investment, it takes a lot of time to integrate new and old resources and run in. The internal control system cannot adapt to the new business scale for a period of time, and thereby increases the control risk of the enterprise.
In general, entrepreneurial investment behaviors increase both inherent risks and control risks, and thus increase audit costs by increasing the risk of material misstatement. Therefore, based on the above analysis, the first hypothesis of this article is proposed.
HI: entrepreneurial investment behavior will increase audit costs.

"Internet+", Entrepreneurs' Investment and Audit Fee
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"Internet+" makes everything extreme [12]. In the past, in order to pursue the scale and scope of economies, products produced on the market were the same or similar. Among homogeneous products, companies that can increase production efficiency and reduce costs gain advantages and gain a foothold in the market. On the one hand, "Internet+" makes products closer to customers, and can be customized according to customer needs, using the long tail effect to quickly gain market share. Products produced by enterprises are usually multi-variety, small batches, and quick refurbishment [9]. This makes the investment behavior of enterprises in the process of resource integration has a very special type. The assets obtained through investment are for a specific market segment or only for temporary product strategies. On the other hand, the internet era is highly uncertain, and manufacturers' business models are also highly random and unstable. Manufacturers do not have a strong fortress to rely on and support, and everything is constantly changing [7]. Therefore, investment with asset specificity will bring more risks to the enterprise. The risks of asset specificity have also been confirmed in existing articles: Kim found that when a company's industry experiences negative cash flow or deteriorating financial conditions, the target company with more industry-specific assets received M&A premiums are significantly lower than companies which has more general assets [28]. Wang found that as the specificity of assets increases, the negative effects of capital mismatches will increase [29].
Therefore, based on the above analysis, the second hypothesis of this article is proposed.
H2: "Internet+" will strengthen the relationship between entrepreneurs' investment behavior and audit costs.

Sample Data
This article takes non-state-owned listed companies from 2013 to 2018 as a research sample, and deletes the industry of software and information technology service, and in the industry of manufacturing, we also exclude the industry of software and information technology service, computer communications and other electronic equipment, internet and related service. What's more, we exclude listed companies on GEM, financial listed companies; and listed companies with missing data and outliers.  In the end, a total of 7384 samples were obtained for this study. The data sources of this article include: an index reflecting the company's implementation of the internet business model is collected and collated by our annual report; other financial data involved in the study are from the CSMAR and WIND databases.

1) Internet business model (In_behave, In_number)
Referring to Yang, we construct the internet action index (In_behave) to reflect the implementation, investment and involvement degree of the company [20]. To be specific, we first identify the key words about the internet business From the perspective of investment effects, long-term equity investment can be divided into three categories: one is investment that has obtained control rights, which mainly refers to the ability to determine the direction of financial and operating decisions of an enterprise or unit, and can be obtained from operating activities in a controlled manner interest. The second is investment that has obtained joint control rights, which mainly refers to collectively controlling economic activities of enterprises in accordance with investment agreements.
The third is the investment that has significant impact, which generally refers to the ability to participate in and decide on the financial and operating activities of an enterprise. Among these three types, controlled investment has the most important influence. It can determine the invested company's business development, financial policies and other decisions, and can control the income of the company's operating activities. Therefore, we set separate indicators to observe such behavior when measuring investment behavior. Considering that there is no indicator that can measure the control investment in the disclosure of financial statements, we refer to Zhang for the measurement of the subsidiary's current ratio [31]. Without considering the conversion between the equity method in the parent company statement and the cost method in the consolidated statement, we define the difference between the parent company's long-term equity investment (control, joint control, significant impact) and the consolidated statement long-term equity investment (joint control, significant impact) as the parent company's investment holding, and the total assets of the In summary, FI, KZK, and KZ three types of indicators can comprehensively measure an enterprise's external investment situation, including both equity and debt investments, as well as control and influence investments.

3) Other control variables
We have added the company size, Big 4 accounting firm, asset-liability ratio (Lever), inventory to assets ratio, net receivables to assets ratio, other net receivables to assets ratio, sales growth rate, asset-liability ratio, loss as the control variable, the specific variable definition is shown in

Empirical Model
I construct models (1)    to whether the company implements the internet business model (if the number of internet disclosures of the company is 0, it is considered that the company has not implemented the internet business model, otherwise it has implemented an internet business model). Compared with the samples that did not implement the internet business model, in the samples that implemented the internet business model, the average and median of audit costs were higher. The T test and Z test also show that the two groups of samples had significant differences at the level of 1%. This is consistent with the results of Yang [20]. At the same time, the mean values of FI, KZK, and KZ of the samples that implemented the internet business model were also higher. Both the T test and the Z test showed that there were significant differences between the two groups of samples at the level of 1%, which to some extent initially verified our reasoning in assumption 1. Table 4 shows the test results of Hypothesis 1. Columns (1), (3) and (5) are regressed with FI, KZK, and KZ as independent variables and Lnfee as the dependent variable. Considering that the audit costs of enterprises are often closely related to the pricing of the previous year, we further add the data of the previous period of audit costs as a control variable in the model. The model also reflects the influence of investment behavior change in audit costs. Columns (2) (4) (6) will add the control variable (Lag_lnfee), and test again. We can see that the test results did not change significantly. The regression results show that when KZK and KZ are used to represent investment behavior, the coefficient β 2 is significantly positive, and investment behavior significantly increases audit costs; when investment behavior uses FI as proxy variable, investment behavior does not increase audit costs. This means the level of enterprises' investment will significantly increase audit costs. It is worth noting that financial investment doesn't influence the audit fee. Table 5 shows the test of Hypothesis 2. Columns ((1), (3), (5)) use the crossover terms of as independent variables, and audit costs as dependent variables.

Empirical Results
Considering that the audit costs of enterprises are often closely related to the pricing of the previous year, we further added the data of the previous period of audit costs as a control variable in the model ((2), (4), (6)) are listed as the results after adding Lag_lnfee. The results show that the transfer coefficient is significantly positive, indicating that "Internet+" strengthens the relationship between entrepreneurs' investment behavior and audit costs. This means that compared with companies that have not implemented "Internet+", entrepreneurs who have implemented "Internet+" are likely to cause greater risks, which will lead to higher audit costs.
Considering the subjectivity of the variable (In_behave) that measures "Inter-net+" in this article, we use the substitute variable (In_number) that is not affected by judgment to re-regress the model. In_number stands for the number of internet business model disclosures. It is the number of manual statistics based  on the disclosure of "Internet+" in the annual report of the company. The result is showed in Table 6. The results show that using In_number instead of In_behave, Hypothesis 1 and Hypothesis 3 still hold.

Conclusions
This article takes non-state-owned listed companies from 2013-2018 as a research sample, constructs the "Internet+" action indicator (In_behave) and "In-ternet+" disclosure times (In_number) to measure the degree of corporate implementation of "Internet+", and constructs investment in financial instruments (FI) and long-term equity investment (KZK, KZ) to measure the investment behavior of enterprises, and finally explores the relationship between entrepreneur investment behavior and audit costs in the background of "Internet+".
The research conclusions of this paper mainly include three points: 1) The level of enterprises' investment will significantly increase audit costs.
The reason for this phenomenon is that modern audit risk-oriented theory requires auditors to take further responses on the basis of assessing material misstatements in financial reports. Therefore, the company's material misstatement 2) "Internet+" strengthens the relationship between entrepreneurial investment behavior and audit costs. The main reason for this phenomenon is: "In-ternet+" makes everything extreme. In order to meet the unique needs of different customers, the investment behavior of enterprises in the process of resource integration is extremely specialized, investment with asset-specific will bring a higher possibility of capital mismatch for the enterprise, and thus bring greater risks to the enterprise.
H. Y. Tao  The practical value of this article is that modern audit risk-oriented theory requires auditors to take further audit responses on the basis of assessing major misstatements in client financial reports. Investment behavior is undoubtedly an important factor that auditors need to focus on when assessing the risk of material misstatement. This article studies the impact of entrepreneurs' investment behavior on audit fee and further explores whether such changes will strengthen this positive impact. This article provides government departments the policy implications for strengthening the investment risk management and has provided empirical evidence for accounting firms' risk assessment procedures in the context of the "Internet+".
The possible innovations of this article are as follows: First, this article examines the impact of entrepreneurial investment behavior on audit costs from a new perspective-"Internet+", and finds that "Internet+" strengthens the impact of investment behavior on audit costs and enriches related research in the field of influencing factors of audit pricing; second, different from previous research focusing on "Internet+", which mainly focuses on the theoretical characteristics of the internet and the subversion of traditional industries, this article studies the relationship in the "Internet+", entrepreneur's investment and audit fee in the empirically, which expands the empirical dimension of "Internet+". Third, Sun and Liu defined financial assets as the sum of financial asset investment, long-term equity investment, and investment real estate investment, and found that the higher the degree of finance, the higher the audit costs [36]. In this paper, by subdividing the investment, it is found that the control, joint control and major impact investments significantly affect audit costs, but the impact of financial asset investment on audit costs is not obvious. Investment provides relevant risk warnings for the other stakeholders in the market.

Conflicts of Interest
The author declares no conflicts of interest regarding the publication of this paper.