Abstract: Achieving common prosperity for all the people is one of the important features of China’s modernization. Enterprises are the main body of initial distribution, therefore, optimizing the internal income distribution is crucial for achieving common prosperity. Taking the A-share listed companies of state-owned enterprise from 2008 to 2018 as the samples, this study examines the impact of state audit on the internal income distribution of enterprises. The findings show that state audit can improve the average salary of the central government-owned listed companies and the ordinary employees, but has no significant impact on the executive compensation. The mechanism analysis reveals that state audit can improve the operational efficiency and information transparency of the central government-owned listed companies, thereby increasing their average salary and that of the ordinary employees. Further research has found that state audit can reduce the on-the-job consumption of executives and narrow the internal income gap of enterprises. Multiple audits can enhance the promotion effect of national audits on the average salary of the central government-owned listed companies and the ordinary employees. The heterogeneity analysis reveals that in the central government-owned listed companies which are in the monopolistic industries, with independent directors at consistent performance locations, and with a higher proportion of share-holding by institutional investors, the promotion effect of state audit on the average salary of the central government-owned listed companies and the average salary of ordinary employees is more significant. Therefore, it is necessary to further strengthen the important role of national auditing in supervising and optimizing the internal income distribution of enterprises, so as to promote common prosperity with a reasonable and orderly distribution pattern.

Key words: national audit, income gap, common prosperity, income distribution