The Study On The Auditor Switches Of The Depressed Companies

In well-developed security market, the research of auditor switches has a history of more than 20 years and a lot of research achievements have been obtained. Because of Chinese security market started relatively late, the research on auditor switches in our country didn't start until 2000. With the more frequent occurrence of auditor switches in the security market, more and more concern is drawn to it. Depressed companies is a special group, it has the strong motivation to switch the auditor for hiding problems. It will cause serious loss to the investors.This thesis focuses on the issues about the switching auditors of the depressed companies. On the basis of summarizing research achievements on auditor switches both at home and abroad, it analyzes the theory and information disclosure of auditor switches. Applying the descriptive statistic and Logistic methodology, it examines the influent factors of 578 sample auditor-switching of the depressed companies from 2004 to 2006. Through the descriptive statistic and analyses, it finds that audit opinions, audit fee, earnings management and management switches are the main factors that influence the auditor switches of the depressed companies. They have the obvious relativity with the auditor switches of the depressed companies. So when the companies become depressed, the investors are of great importance to the four factors. Meantime it also focuses on other factors that influence the auditor switches of the depressed companies, such as operating risk and financial risk. It also finds that disclosure of information in the fiscal report does not show the real motivations of the auditor switches. Among the 97 auditor switches companies, only one third disclose the reasons of auditor switches, and the reasons do not include the useful information. Finally it discusses the research limitation of the study and makes some constructive supervision suggestions. Besides it advises that the department of security supervision special focus on the auditor switches of the depressed companies and take some measures to stop the depressed companies switching the auditors. So that the investors can get some useful information from the auditor switches of the depressed companies and keep the security market in order. It also provides some policy suggestions for the operation of the security market.