The Empirical Study On The Relations Of Financial Distress, Audit Opinion And Voluntary Auditor Switches

Auditor changes have the serious economic consequences. The management authorities purchase the advantageous audit opinion or threaten auditor's independence through changing the auditor, which will harm audit quality maintenance. At the same time, many problem of the listed company will also hides following auditor changes or the audit plot, which does not good to protects investor's benefit, particularly shareholder's rights and interests. when the listed companies falls into the financial distress, their unusual characteristic and the negotiable securities Supervisory department's special treat, so it will supply good opportunity or the platform for us to study the auditor change and the related audit opinion purchase economic consequences; and the disadvantageous economic consequences of auditor changes will become more serious, so it is necessary to give more attention and the supervision to these companies.After reviewing the relevant literature, the author analyzes the theory, and the current situation as the relations among financial distress, modified audit opinion and auditor switches. By using the descriptive statistical analysis and the Logistic regression analysis,by compiling the samples of the voluntary auditor switches in 2005 and 2006, we found that:the financial distressed companies and the companies which were crown by ST, SST, *ST, S*ST are more inclined to change auditors; the companies which were given modified audit opinion are more inclined to change auditors;the financial distressed companies are more inclined to be given modified audit opinion. Then,the author analyzes the economic consequences of voluntary auditor switches. Finally,the author proposes some constructive supervision suggestions according to the empirical result of study and the current situation of China, in order to build the long-term supervision mechanism of the voluntary auditor switches of the listed company.