Accounting Information Quality And Auditor Switching

New Accounting Standard, which is coordinate and convergent with high-quality international accounting standards, has fully implemented in China's listed companies since January 1 st 2007. Under the background of changes of accounting standard, this thesis selects Shanghai and Shenzhen stock exchange A-shares listed companies from 2004-2009 as samples, makes research on whether new accounting standard improves earnings quality, which is the core part of accounting information quality. This thesis uses absolute value of crossing discretionary accruals as an alternative variable of earnings quality. However, crossing discretionary accruals is often used to measure earnings management. Firstly, this thesis tests whether earnings management which uses absolute value of crossing discretionary accruals as alternative variable is significant related with auditor switching. Then, this thesis makes a summary about whether earnings quality will impact auditor switching.Specifically, the idea of this thesis is:Firstly, obtain every company's discretionary accruals by regression of adjusted Jones model by industry by year, and use the absolute value of discretionary accruals to measure earnings quality. Then, after controlling the effects of non-accounting standards, regress the model of earnings quality to examine whether the earnings quality has increased after the new accounting standards. Furthermore, test whether earnings management which uses the same variable is significant related with auditor switching. Some researchers found that the nature of listed companies is related with earnings quality. In order to further investigate more flexible new accounting standard's impact on different type of listed companies'earnings quality, this thesis divides all samples into stated-owned companies group and private companies group according to their controlling shareholders. Correspondingly, while testing the relationship of earnings management and auditor switching, this thesis also divides the samples as before.The results show that after the implementation of new accounting standards, the overall earnings quality of listed companies has increased, and earnings management behavior has decreased. Earnings management significantly affects auditor switching, eventually leading to the reduction of auditor switching behavior. After dividing the samples, this thesis find that the results in stated-owned companies group are basically the same with full samples, but there is no strong evidence to support the underlying assumptions in private companies group.