Studies On Auditor Changing In A-share Market Of China

In recent years, more and more listed companies changed their auditors and a lot of these change cases were not with good intention. In order to avoid bad economic potentials, we need to study the auditor change cases of listed companies.This essay, based on a sample of all listed companies in China who changed their auditors between 2004 and 2005, focuses on the basic characteristics of these companies, the causes of changing auditors, the market reaction and what measures we should take.At the beginning, the author acquired the basic characteristics of these companies through common statistic description: these companies are smaller in sizes and not in good financial condition.Secondly, a model is constructed for regression analysis, and three factors are found significantly relative to changing auditor: a better region, good auditor's opinion, and changes of the management. In addition, the author found three other factors with less influences to the changing auditor: auditor differentiation, total capital of the company and EPS.Then, this essay examined the market reaction, the value of the information and impacts to the stock exchange market through the method of event study, and gave an initial comment on the information disclosure system. The author found that there is reaction to auditor change in the market.Finally, through study the author found some limitations in relative information disclosure systems and other law systems. At the end of this article, several policy proposals are brought forward on the above research as well.