Researches On Audit Quality Of Listed Companies

The importance of independent audit has been recognized. The development of CPA and the reformation of auditor firms play a fatal role in its independence. The independent audit by CPA is so important in capital market's operation, and it decides the audit quality of listing corporations. However, the rising security market of China affects the growth of CPA. The critiques of the public shadow the development of CPA. From the "Old Three Cases" to the "New Three Cases", with the auditor failure cases of listing corporations, the debating of audit quality has continued and the quality of independent information audit has attracted much attention. Nevertheless, the contraction between surplus supply of lower layer and lack supply of higher layer has been highlighted. While the development of CPA profession and listing corporations has 'just started, the research of these fields is too scarce. So, how to improve the auditor quality of listed corporation to accelerate the sustainable development of CPA profession has become an important matter of the specialists and the public.This paper is the basic theories and empirical study about audit quality of listing company in special institutional background of China economic and security market. First, this article uses agency theory to analyze the conception and measurement of audit quality. After that, it puts out the basic research structure of audit quality of listing company. Then, it sets up the theoretical structure about audit quality of listing company and does empirical study to analyze the audit quality of listing company in special institutional background of China economic and security market. To confirm the three hypotheses in empirical study, this article selects all listing company and their auditors inChina's stock market from 1996-1999 as the sample of the study. Depending on univariate tests, multivariate tests, audit quality differentiation analysis, logistic analysis before auditor changes and regression analysis after auditor changes, this article tests the three hypotheses one by one. Finally, according to normative study and positive study about audit quality of listing company, it puts forward practical methods to improve and guarantee the audit quality of listing companies under the comprehensive control system.According to the study outline and method on audit quality of listed companies, this thesis leads to the following conclusions:(1) Audit is an agent function, and the effect of the agent function depends upon the quality of service. Audit is institutional arrangement harmonizing principal and agent, which plays down agent cost and enhances agent efficiency furthest. Audit quality is denoted as united probability, which lies on auditor finding, reporting or disclosing the special violating behavior in accounting information of audited client. The former rests auditor capability, audit procedure, audit sampling and audit devotion; the latter rests with audit independence. Audit quality results from joint operation of these factors.(2) Earnings management is the effective evaluating standard of audit quality of listed corporation in China. Audit confines earnings management along with its quality. Audit quality reflects earnings management in financial information by auditing. There is reverse relationship between audit quality and earnings management. The higher audit quality comes into being the smaller earnings management, and improves reliability of accounting information. Auditor profession hasn't formed standard market system in China, and earnings management exists widely. The mutual relationship is more obvious between audit quality and earnings management. Therefore, earnings management is the optimal measurement index for audit quality of listed companies in China.(3) The effective demands of audit service and legal responsibility determine the audit quality of listed corporation. Audit is faced with mutual action ofstimulation and obligation, which is inheren...