The Investigation Of Market Reaction To Auditor Switches In China

In 1993, the securities regulatory commission had prescribed that the listed companyhad to report the event to the public if it had changed its auditor. As one of the importantevents reported to the public, does the market react to the event of auditor change? If themarket reacts to the event, how to explain it? If not, what are the reasons? This essay tries tostudy some samples of listed companies which had changed their auditors in our capitalmarket.While observing the changing of auditors, with the help of the public informationdisclosed by the listed companies as well as statistical data, we studied the current situationof auditors switches and the information disclosure system in our countryThis essay examined the market reaction and the value of the information through themethod of event study. Besides, the essay also examined the different reactions between twogroup of samples which classified by different financial situation,different auditopinion. Then gave an initial comment on the information disclosure system. The authorfound that there was no obvious reaction to auditor change, and the information disclosuresystem should be amended.Finally, the author researched the relative information disclosure system and other lawsystems, and found some shortcomings. At the end of this article, several policy proposalsare brought forward on the above research.