Empirical Research On The Influence Of Signed Certified Public Accountant Mandatory Rotation On Audit Quality

This century, there are a lot of fraudulent financial reports in the world,the audit quality has been the focus of audit, and whether the auditor mandatory rotation is necessary has become a hot topic. Many countries have issued Acts to make auditor or accounting firm mandatory rotation since US appeared the famous bill -"Sarbanes-Oxley Act"in 2002, so that it improves the auditor independence and audit quality. Following America, Mandatory Auditor Rotation has been also implemented in our country since 2004.1.1.But it has not reached a consensus on whether mandatory auditor rotation on improving audit quality so far. Mandatory Auditor Rotation in our country has implemented more than 7 years, and its effectiveness is issues of mutual interest in the theory and practice community.At first, in this paper, the affect of the mandatory rotation on audit quality is analyzed from the perspective of agency theory. Then the audit quality can be better measured by the level of earnings management after introducing and comparing alternative measure of audit quality, referring to research methods and conclusions of the related reference at home and abroad, combining the Chinese unique audit background. The influences on audit quality are analyzed from internal and external factors, and the intrinsic necessity of mandatory rotation of signed CPA in our country is obtained after the audit market analysis.From the empirical view, the study hypothesis which is signed mandatory rotation CPA is positive correlative to audit quality is proposed, A-share listed firms from Shenzhen and Shanghai Stock Market that have annual audit reports during the period from2008 to 2009 will be selected as research samples, 1547 samples are obtained after analysis and selection. The absolute value of Discretionary Accruals estimated from adjusted cross-sectional Jones'model is employed. The SAS is used to test OLS model so that the influence of our executing the periodic mandatory rotation system can be analyzed. The empirical results indicate signed CPA periodic mandatory rotation can contribute to the improvement of audit quality to some extent.Finally, according to theoretical analysis, empirical research and current situations in our country, the paper has put forward four related suggestions such as building new audit agent model, strengthening the auditor integrity education and governing auditing market, strict control of listed company's information disclosure, strengthening the legal liability of accounting firms and raising the cost of non-compliance.