An Empirical Study On The Relationship Of Audit Tenure And Audit Quality Base On The Size Of The Audit Firms

As the promulgation of Sarbanes & Oxley Act in USA, the relevant experts around the world who focus on studying the relation of audit tenure and the audit quality becomes more and more, but they don't consider the influence of the size of audit firms to audit quality as well as to the relation of audit tenure and audit quality, however some of them only put it to be a control variable in their models when they have considered the relevant influence. There have not a study about the relation of audit tenure and audit quality base on the different size of audit firms. That is the new research point of this thesis.Firstly the author point out the hypothesis in this thesis at the base of the academically logistic frame which is about the trend of audit quality impacted by the increase of audit tenure. Secondly the author samples the listed companies of Shanghai and Shenzhen which receive clean audit opinions between 2002 and 2006 in the Chinese Securities Market as crude samples, and finally acquire the samples after filtrate them by certain standard. Thirdly the positive study is used to examine the hypothesis and the model set in this thesis. Finally the conclusion can be drawn from this paper: there is significantly negative relation between audit tenure and audit quality in the sample which the companies are audited by top 10 audit firms, and there isn't any significant relation between audit tenure and audit quality when the companies are audited by not top 10 audit firms. The author give some suggestions to ensure audit quality after explore the reason lead the phenomenon discovered in this paper.