Abstract:Using manually collected government audit announcement data, and taking the state-owned listed companies from 2013 to 2017 as samples, this paper uses the PSM+DID method to examine the impact of government audits on the innovation activities of state-owned listed companies, and further explore the relationship between them, based on internal control quality and whether there exist internal control defects, with group tests performed on the samples. The research results show that government auditing has significantly increased the innovation input and output of state-owned listed companies.After adding internal control as a moderating variable, the government audit plays a more significant role in promoting innovation activities in companies with high internal control quality and no internal control defects.