The Research Of The Independent Auditing Market Performance Based On The SCP Model

Certified Public Accounting (CPA) is the result of the market economy. Influenced gradually by the planned economy, Chinese independent auditing market is almost in inefficient competition. Illogical market structure, ineffective scale of benefit, illogical market conduct and ineffective market performance are the key problems which influence the development of the independent auditing market. The purpose of this paper is to use the classical SCP model in Industry Organization Economics as the support to research the independent auditing market performance.In this paper, the writer first recalls the industry organization theory and SCP model, studies three parts in this model and finds the relationship in the market structure, market conduct and market performance. The paper wants to find out that how to use SCP model to research the independent auditing market, then to use this model to research the independent auditing market. The idiographic research is as follow.The market structure is the basic conception and the subject of the industry organization. By means of the study of the independent auditing market concentration ratio, distinction in production, the paper gets the conclusion that the market structure in China is a poor centralized oligopolistic type at present. Through the theoretical analysis and the empirical analysis the paper concludes that there is a close relationship between the auditing market and the auditing performance. The market performance is the converse U function to the market concentration. That means the performance will be heightened then descended with the increasing of the concentration.The market conduct is in the middle of this model. Through studying the auditor changing, auditing charge, operating diversification and firm consolidation, the paper finds that the improper conduct influences the market performance seriously. In the auditing market, the auditing firm disobeys the market rules, the opinion-purchasing is possible by the auditor changing, the auditing charge is not proper in the auditing market and some firms demand thelow price blindly, all of those influence the independence of the auditing. Services diversification makes the auditing industry not independent again.At last, the paper gets the conclusion that the best independent auditing market structure is the centralized oligopolistic type made by the consolidation, which can improve the auditing market performance.