The Research On Auditor Resignations

In western countries, the auditor resignation is a kind of common market phenomenon. It is also a kind of rational behavior for the accounting firm to deal with litigation risk. But it is the scarce phenomenon in our audit market. Assuming auditors have limit rationality and opportunism tendency, combining associated theoretical and empirical research conclusions, and adopting logical deductions, data and charts, the thesis studies some questions which related to auditor resignations to explain the phenomenon.The thesis mainly discusses auditor resignations from the narrow sense, which is caused by litigation risk. Then the thesis studies the relation between auditor resignations and auditor reputation, and the relation between auditor resignations and auditor legal responsibilities. Finally, returning to china market, the thesis raises policy improvement to the present system obstruction.Main viewpoints of the thesis include: (1) auditor resignations have obvious economic consequences. Auditor resignations convey the information about auditors and the client, investors, client, successor auditors and successor client may have different reaction. Then, the whole market may be influenced; (2) auditor resignations are the important cost of building and defending auditor reputation, aiming at obtaining long extra-gains of reputation capital; (3) limited arrangement and unlimited arrangement of legal responsibilities have different effects in supervising auditor behaviors. However, different forms of legal responsibilities are not the direct reason of auditor resignations. It is possible for auditors to resign in two arrangements; (4) perfecting the corporate ownership structure, pushing the partnership reform of accounting firms, protect auditor property rights and increasing the information transparency can provide enough system conditions for auditor resignations.