| Audit market and audit behavior research is a relatively mature topic in the western academic field. Zeff and Fossum (1967) pointed out that, the competition characteristics of audit market can be fully understood, only when the reason about public accounting firm’s growth and development are deeply studied and factors of brand formation analyzed, on the basis of which audit behavior of accounting firms is to be explored then. Based on the previous creative research and industry organization theory, a series of theoretical literatures about audit market structure, audit behavior and audit market performance appear and spread widely. Stigler (1968) thinks the value of market structure research lies in connecting the possibility of competition behavior with the measurability of structure problem.Thus it is obvious that audit market and audit behavior are the two inseparable objects in the research of market structure.In1980, CPA (Certified Public Accountant) system was recovered in China and this industry develops quickly. Along with the rapid development of capital markets and regulators strategy to make the audit firms bigger and stronger in recent years, great opportunities have been offered for development of audit market and CPA team. As a result, the number of both accounting firms and CPA Practitioners are increased immensely and local firms’ capability keep strengthened and practicing ability is improved continually. However, there are some problems to some degree which result from the development of the industry, such as ineffective audit market supervision; diminishing accountability against the increasing improved audit quality of accounting firm; Moreover, even the four largest accounting firms (the Big Four, namely Pricewaterhouse, Ernst and Young, KPMG and Deloitte) who are though famous for their accountability and capability are still exposed to failure due to audit issue; unbalanced development between the international Big Four and Chinese domestic firms; how to promote and improve localized strategy for the international Big Four, etc. Therefore, it is still necessary and significant to discuss the relationship between audit market structure and audit behavior under the changing circumstances. Based on the abovementioned reasons, the thesis focuses on "the first legion" in audit market behavior of securities qualifications audit firms (simply named securities firms) against the background of China’s transitional economy and examines the audit market behavior of securities firms in the background of China’s continuous evolving securities audit market. The thesis tries to discover the development course of China audit market structure and firm behavior from year1993to2012and tries to empirically test the relationship between the audit market structure and audit pricing, audit market structure and the audit opinion behavior in the hope to explore their inherent relation and cause. Furthermore, the thesis suggests some solution and strategies to make China’s CPA business "bigger and stronger" and it also provides reference for policy makers and implementation of audit business in the hope to optimize audit market and audit behavior.This thesis consists of seven chapters. The first chapter is introduction, in which the paper’s research topic, purpose and significance and definition of relative concept are introduced. Moreover, it also introduces the research content, research method, research route, frame structure and innovations of the thesis. The second chapter is literature review, in which the relative research topic are presented and briefly criticized and topics in literature review include market structure problems, firm size, audit market structure and audit pricing, relation between audit market structure and the type of audit opinions, audit market structure and audit quality, and other relevant topics. The third chapter is theory and it elucidates bases for theoretical analysis and empirical research. It mainly includes industrial organization and structure theory, reputation theory, economy scale theory, deep pocket theory and principal-agent theory. The fourth chapter analyzes and compares the changes and basic features of Chinese securities auditing market structure and audit behavior from the historical perspective. In this chapter,1993is regarded as the starting year and the author divides the history of the securities audit market from1993to2012into three different stages,1993-1999,2000-2006and2007-2012, to describe and analyze. Thus, the basic characteristics of accounting firms and changed status of China’s20years audit market structure are analyzed and clarified, providing a basis for the empirical analysis in the following two chapters. The fifth and sixth chapters are the empirical analysis of the thesis. The two chapters empirically analyze the audit market structure and audit pricing, audit market structure and audit opinions issues respectively. The result of empirical analysis of audit market structure and audit pricing behavior in the thesis indicates that:during the period of1993-2011, audit prices for the international Big Four are higher than Chinese local large domestic firms. As the audit market structure (upgrade) changes, the average audit prices for China’s accounting firms did not change greatly. As the audit market structure (upgrade) changes, the audit prices for the international Big Four is continuingly increasing while for the five largest domestic firms(the native Big Five), the price is decreasing, which demonstrates there are big gap between the international Big Four and the native Big Five. Through the empirical analysis of audit market structure and the audit opinion behavior analysis, the results show that:compared to other firms, large-scale accounting firms’ audit quality is better, which is represented by "the international Big Four" and "the native Big Five". What needs to be emphasized is that audit quality of the international Big Four is not significantly better than that of the native Chinese Big Five; As the market structure of China’s securities audit changes (upgrade), large-scale firms’ audit quality does no significant increase; the upgrade of audit market structure does not help to improve the overall audit quality of China’s securities audit market. The seventh chapter is conclusion of the thesis. It is the part, research suggestions and prospects of future research are discussed.The possible contributions are:(1) First, the thesis analyzes the historical evolution path and the basic characteristics of China’s securities audit market and audit behavior comprehensively and systematically from1993to2012for the first time in this field and the thesis gives empirical analysis of data from1993to2011of the relationship of audit market structure and audit pricing, audit opinion behavior. The thesis chooses the consecutive data from1993to2011for analysis and comparison during the analysis of the historical evolution path and the basic characteristics of China’s audit market structure and audit behavior. In the process of empirical analysis, it also chooses the consecutive data from1993to2011to analyze "the international Big Four"," the native Big Five" as the representatives of the large-scale firms and other three kinds of different scale firm types. The thesis gives empirical analysis about market structure, audit pricing and audit opinions behavior by using audit market concentration as the independent variable which represents the status of the audit market, which differs from most previous research papers that uses short-term or medium-term analysis approach. Meanwhile, the use of consecutive data also provides more convincibility and timeliness of both the results and suggest of the thesis.(2) A series of conclusions obtained by empirical research in the thesis constitutes complement the research of large-scale firm audit pricing during transitional economy, which differs from the research in mature market. The thesis thus enriches the relative literature on audit market structure and audit behavior.(3) The paper proposes to strengthen the collective action mechanism of restriction as an innovation. Based on the existing research results, it raises corresponding policy from the macro, meso and micro levels. Specifically, from macro level, positive cycle of legal mechanism-firm size-firm reputation should be constructed; from meso-level, the mechanism of firm collective action should be strengthened and the relative stable and effective rules should be set to extend chains and increase the number of game playing; The thesis also proposes to enhance the moral motivation of collective action or implicit incentive to enrich possible measures. |
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