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An Empirical Study On China's Listed Companies Accounting Firm To Replace

Posted on:2002-02-26Degree:DoctorType:Dissertation
Country:ChinaCandidate:J Y XiongFull Text:PDF
GTID:1116360062475579Subject:Accounting
Abstract/Summary:PDF Full Text Request
In recent years, there is an increasing number of listed companies that change their auditors. The number of vicious cases has increased every year where the managements of listed companies, through the change of auditors, try to prettify their financial statements and mislead investors. We should pay more attention to this situation. This essay, based on a sample of all the A-share listed companies that change their auditors between 1996 and 1999, studies the basic characteristics of those companies, the causes of changing auditors, information disclosure, market reaction and other related areas. The author believes that this type of study will be both helpful to enhance understanding on the audit market and useful for all the stakeholders in the capital market (especially the securities regulatory agency) to take appropriate measures to restrict the management of listed company from malign change of auditors, so as to protect auditor independence and to ensure that high quality accounting information is available for investors' decision making.The essay includes six chapters. The content of each chapter is explained as follows:Chapter One: IntroductionThis chapter describes the motivation for the study, the research methodology, the issues studied and the hypothesis formulated.Chapter Two: Auditing Theories and Literature ReviewThis chapter describes the evolution of modem independent auditing and the underlying rationales. It also analyzes several features in the independent audit in our country. After that, a review of the positive literatures concerning auditor change, both domestic and abroad, is made to serve as an initial point of the study.Chapter Three: Analysis of the Characteristics of the Sample CompaniesThis chapter first makes a statistic description of the basic facts of the sample companies. A positive analysis is then made on the sample companies about the company size, earning level, financial position and the type of audit opinions received before the change of auditors. Three conclusions are reached about the features of the sample companies. First, the size of the sample companies is significantly smaller than that of the non-sample companies. Second, the earning level of the sample companies is significantly lower than the non-sample companies, and the proportion of companies with financial difficulties among the sample companies is significantly higher than that among the non-sample companies. However, no significant differences are observed between sample companies and non-sample companies in the aspect of debt payment abilities and cash flow. Third, sample companies are more likely to get nonstandard unqualified audit opinions and they get significantly more when compared with non-sample companies. Besides, the audit opinions received by the sample companies tend to become worse.Chapter Four: Analysis of the Reasons of Changing AuditorsThis chapter first makes a descriptive analysis on the reasons of changing auditors disclosed by the sample companies. A positive analysis is then conducted on these issues: Did the sample companies choose accounting firms in the same region to replace the original auditors? Was theearning level improved after the change of auditors? Did the sample companies receive better audit opinions after the change? It is also examined whether the sample companies, when changing their auditors, choose the "non-Big-Tens" who seldom issued nonstandard unqualified opinions. The conclusions are: First, the sample companies did consider the factor of region when they changed their auditors. Second, one of the real reasons why the listed companies change their auditors is to the wish to have earnings management. Third, another reason for changing auditors is the hope to get "better" audit opinions. This can be observed from the tendency of choosing accounting firms. Those accounting firms that seldom issue nonstandard unqualified opinions are more welcome in the choice. A model is constructed for regression analysis on the linear relativit...
Keywords/Search Tags:listed companies, changing accounting firms, positive research
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