| Independent audit is an important institutional arrangement of capital market regulation.Accouting firms are the main auditing business executants,which need to not only realize their own development but also to improve the audit quality,so as to maintain the accounting information security,ensure the effective operation of capital market.Since its recovery and reconstruction in 1980,Chinese CPA industry has been exploring the way of improving audit quality and sustainable development.The choice of organization form of accounting firms is an important aspect of these attempts.Since the Document No.56 of the State Office issued in 2009,till now the domestic large and medium-sized accounting firms generally completed the conversion to a special general partnership restructuring as the main content of the organization.The successful completion of the organizational form Transformation has laid a good foundation for the realization of the internationalization strategy of Chinese CPA industry,and has become a landmark change in the history of the development of the industry.Audit quality is fundamental to the existence and development of CPA industry.So whether the organizational form transformation of accounting firms helps to improve audit quality has become a common concern of industry regulators and all sectors of society.The difference between the two basic organizational forms of corporate system and partnership is not only manifested in the way of external risk taking,but also in the internal decision-making power allocation and profit distribution mechanism.The change of the power and responsibility distribution mechanism under the governance structure caused by the organizational form transformation of accounting firms not only affects the overall risk awareness and quality control of accounting firms,but also has a more direct impact on the practice and attitude of auditors.The audit practice of different countries or regions shows that to maintain the high quality audit service and reasonable assurance of companys' accounting information fairness,is the basis for accounting firms to gain market reputation and competitive advantage,and all of this is closely related to the level of auditor knowledge capital and its practicing audit prudence.Knowledge capital not only has strong value creativity,but also can achieve its own value in the process of being applied to practice,which helps auditors to acquire and accumulate new and more creative knowledge and skills.Auditors of high knowledge capital have strong initiative and learning ability,and have strong ability to apply knowledge capital.To better play the dynamic appreciation and value creativity of knowledge capital,accounting firms need effectively incentive auditors for their specific investments.The incentive and restraint mechanism in the form and governance structure of accounting firms is an important factor that affects auditors' effective acquisition and usage of professional knowledge and skills.The research reveals important theoretical and practical significance,which extends the research of accounting firms' organizational form transformation and its audit quality improvement effect to the auditor's individual level,so that the relationship between auditor's knowledge capital and audit quality is dynamically investigated.According to the dynamic characteristics of auditor knowledge capital,this article analysis the role path of knowledge capital dynamic process value-added in the process of usage,and overall studies the differences of the incentive and constraint mechanisms before and after the accounting firms' organizational form transformation,and then deepley analysis its influence to knowledge created and audit quality improved.Firstly,from multiple perspectives of decision right allocation,income distribution and the risk and accrual allocation mechanism changes,systematically studies the relationship between accounting firms' organizational form transformation and audit quality;and extends the view of research to the auditor individual level,to study the dynamic relationship between knowledge capital and audit quality under the background of organizational form transformation,and to reveal the mechanism of different governance structure and its accrual allocation mechanism how to influence the auditor's behavior and audit quality.Secondly,raise several propositions about the relations among accounting firms' organizational form transformation,auditors knowledge capital and audit quality based on theoretical analysis and mathematical model infer.Thirdly,present specific hypotheses deductive reasoningon the basis of the propositions,set econometric model compliancing Chinese economic environment and institutional setting,and then empirically test and analyze these hypotheses using the samples of listed companies and their signing auditors during 2007-2015 in Chinese A share market.Finally,the specific conclusions are formed.As a whole,the conclusion of theoretical and empirical analysis mainly includes three aspects.Firstly,accounting firms by limited liability company system transformed into special general partnership,internal governance structure and responsibilities distribution mechanism changes had a strong incentive to auditor behavior,improve the practice effort and practicing prudence,and help to enhance the overall audit quality.Multi views analyze the accrual allocation mechanism change caused by accounting firms' organizational form transformation,and raise a proposition about the relations between the organizational form transformation and audit quality,and present hypothesis focus on accounting firms' overall quality control and risk identification cases and then empirical analysis these hypothesis.It can be found that:(1)Accompanied by changes in the organizational form of accounting firms,the internal governance structure and accrual allocation mechanism also changed,the allocation of decision rights and income distribution mechanism of special general partnership accounting firms help improve the auditor's enthusiasm and the willingness of cooperation,and the risk sharing mechanism enhance auditor's legal responsibility and raise their risk consciousness,these aspects are helpful to improve the auditor's practice effort and practice of prudence,so they play stronger inhibition effect to customer management earnings manipulation behavior,as a result the audit quality of accounting firms is overall improved.(2)The risk sharing mechanism in special general partnership accounting firms increases the legal liability of auditors,making them more vigilant in the face of high legal risk customers and more sensitive to this type of risk,so auditors shall implement more cautious audit procedures in practice process and intention to reduce the probability of audit failure and audit litigation risk which was induced,their behavior objectively improve the earnings quality of customers' financial statements.(3)Samples are grouped in before and after organizational form transformation,the test shows there is difference in legal risk identification and control of accounting firms and auditors under different organizational forms,accounting firms and auditors make preventive reaction to the expected legal risk changes brought from the transformation policy,so they play more significant inhibitory effects on high risk customers management earnings manipulation behavior.(4)Analysis the local accounting firms' organizational form transformation effect out of the Big4 samples,the test shows organizational form transformation promote effectively the inhibitory effects to customers management earnings manipulation behavior,and the effect more manifest to high legal risk listed companies.(5)Distinguish the directions of listed companies management earnings manipulation,there is a significant relationship bwtweent accounting firms' organizational form transformation and positive earnings manipulation,and this effect is more obvious in the samples of high legal risk companies;while for negative earnings manipulation,the inhibitory effect is not obvious but there.This may be reason that auditors generally more concen customer companies management positive earnings manipulation behavior.Secondly,the higher the knowledge capital level of auditors is,the higher their competency and independence are,which helps to improve audit quality.Moreover,there is interaction effect between auditor's education level and their experience in improving audit quality.Based on the analysis of the relationship between auditor's knowledge capital and audit quality,a basic proposition is put forward through the deduction of mathematical model,and then auditor's education level and practice experience are empirically investigated,and their interaction on audit quality is also discussed.It can be found that:(1)Individual auditor education level is higher,his general audit business knowledge and skills are more and more,strong learning ability can also contribute to his knowledge capital further accumulation,this bring to him strong competence,so as to show strong inhibition effect to client financial statements of earnings manipulation,thus improving the quality of the audit report.(2)The more experienced auditors practicing their risk awareness and risk identifiable ability,can effectively determine the range of possible misstatements or omissions of audit clients in the financial statements,and then design and implement appropriate audit procedures,to ensure the credibility of financial statements information and improve the audit quality.(3)Auditors with higher educational level have higher learning ability and stronger acquiring new knowledge,this helps him increase of experience and continue to get new audit related business knowledge in audit practice process,so as to further increase his capacity of control of audit risk,to adapt to the new audit business and effectively occupation judgment ability,which helps him to better carry out the audit work,to ensure the quality of the information of customers of financial statements.(4)Distinguish the directions of listed companies management earnings manipulation,the results indicate that the increased level of knowledge capital can improve auditor's competence and independence,and thus he plays a better inhibitory effect to listed companies positive earnings manipulation,but notfor negative earnings manipulation,the interaction effect between auditors education level and professional experience is mainly manifested in the inhibition of positive earnings manipulation of listed companies.(5)The relationship between audit reviewers' education and experience level and the audited financial statements earning quality is not obvious,this reveals that they mainly play roles of two or three levels checkers to audit projects,since they are less involved in the audit the execution of the project case,their high knowledge capital is difficult to be used adequately,so they play limited role to audit quality improvement.Thirdly,The change of incentive and constraint mechanism caused by accounting firms' organizational form transformation has better incentive effect to specific investment of high knowledge capital auditors,thus affecting the creativity of knowledge capital and dynamic value-added role,so as to further strengthen the positive relationship between auditors knowledge capital and audit quality.Analyzing the effect of accounting firms' organizational form transformation to high knowledge capital auditors and their competence,raise a proposition and hypothesis based on theoretical analysis and athematical model infer,and then set econometric model to empirical test the hypothesis.It can be found that:(1)The responsibility distributionand and promotion mechanism in special general partnership accounting firms,can incent higher educational level auditors to deeply intergrate knowledge based on the existing explicit knowledge capital,thus help then to achieve the dynamic value-added role of knowledge capital,resulting in faster access and acquire new business knowledge and skills,to play a more important role in the practice process,so as to the higher quality assurance for listed companies financial statements fairness is realized.(2)Along with the accounting firms' organizational form transformation,responsibilities and promotion mechanism can incentive experienced auditors exoress their higher knowledge integration capability,continuely accumulate tacit knowledge in the process of “learning by doing”,so as to get more new audit business knowledge and skills,and through the self circulation accumulation effect of knowledge capital,to further improve the occupation judgment ability and audit quality control ability,thus showing greater inhibition effect on the listed company's earnings manipulation.(3)Sample grouping test results showed that: auditors with high education level are more sensitive to the variation of audit firm's accrual allocation mechanism,more inclined to further specific investment of knowledge capital to improve competence,intend to seek more decision rights and accrual and to avoid the risk or potential losses caused by the firm restructuring,inhibition of earnings manipulation of listed companies is more significant;accompanied by changes in the incentive and constraint mechanism of firm restructuring,rich practicing experience through learning by doing process specific investment of knowledge capital will stronger,and with higher ability of knowledge integration continue to get more new audit business knowledge and skills,so that its inhibitory effect on the practice of earnings manipulation of financial statements of listed company continue to increase.(4)After the organization form transformation of local accounting firms,partnership governance structure has performed good incentive effect to high knowledge capital auditors,auditors with higher education and experience level express their higher knowledge absorption and integration capabilities and constantly enhance the inhibitory effect on earnings manipulation,so as to promote audit quality to a greater extent.(5)Distinguish the directions of listed companies management earnings manipulation,the test shows that stimulated by the responsibility distributionand and promotion mechanism in special general partnership accounting firms,high knowledge capital auditors showed stronger inhibition effect to the listed companies positive earnings manipulation behavior,this inhibition performance to the listed company's negative earnings manipulation behavior is not obvious.In conclusion,based on the background of Chinese accounting firms' organizational form transformation,this article systematively analyze the relationship between accounting firm restructuring and audit quality from multiple perspectives of decision power allocation,income distribution and risk responsibility allocation mechanism;further explore the relationship between the individual auditor knowledge capital and the audit quality,and dynamically investigate this relationship under the change of incentive and restraint mechanism caused by organizational form transformation,to reveal the accrual allocation mechanism under different governance structure how to influent auditor behavior and audit quality,deepen the understanding of the motivation of knowledge workers and knowledge type of corporate governance.To be specific,the academic significance of this article includes that:(1)From the multiple perspectives of accounting firm's internal decision-making power allocation,the distribution of income and risk,responsibility allocation mechanism,make a systematic analysis and research on the relationship between accounting firms' organizational form transformation and audit quality,the audit quality enhance efficiency should be wholly presented,which is helpful to deepen the theoretical understanding of the influence of audit quality from the accounting firms governance structure and incentive mechanism aspects.(2)Study the relationship between auditor knowledge capital and audit quality through the two basic dimensions of education and experience,and from the perspective of incentive and constraint mechanism change cased by accounting firms' organizational form transformation,systematically analyze the dynamic value-added role path of knowledge capital and the internal mechanism of audit quality improvement in the process of knowledge capital is utilized,dynamically deepen the research on audit quality field.(3)Dynamic changes in accounting firm internal incentive and constraint mechanism this paper focuses,dynamic study on the relationship between auditor knowledge capital and audit quality,help to improve the internal governance of accounting firms and the external supervision mechanism design and implementation promote the CPA industry continuously improve the audit quality,to achieve the connotation and sustainable development.This study deepens the reseach of the formation and upgrading mechanism of audit quality and knowledge based enterprises governance,and also provides a theoretical basis for the formulation and evaluation of regulations and development policies of CPA industry. |
PDF Full Text Request