Study On The Audit Opinion Modification Of Chinese Listed Companies

In recent years, the issue of audit opinion modification which gains more and more attention from investors and regulators.For listed companies,they all want to be given standard unqualified opinion, even though to be given standard qualified opinion,they hope through switching the nature of the audit opinion to alleviate the pressure of administers. The nature of the audit opinion have great effect on the listed companies,so the CPAs will face pressures from the listed companies when give the audit opinion, they tend to switch the opinions from qualified opinions to unqualified opinions by explanatory notes to meet the requirements of listed companies,they hope through explanatory notes to avoid the risk of audit and their legal responsibilities.Audit opinion modification can be divided into four types: switching the qualified opinions to unqualified opinions by explanatory or emphatic notes; switching the unqualified opinions by explanatory or emphatic notes to standard unqualified opinions; switching adverse opinion to qualified opinions; switching qualified opinions or adverse opinion to disclaimer opinion.This thesis using the data from Chinese A share listed companies during the period from 2003 to 2007 which to be given unqualified opinions,unqualified opinions by explanatory or emphatic notes and qualified opinions.We classified the samples into group1(unqualified opinions by explanatory or emphatic notes vs qualified opinions) and group2(standard unqualified opinion vs unqualified opinions by explanatory or emphatic notes) .Tinking of the Share Segregation Reform of year 2005 in our country, this thesis analyze on the basis of two periods 2003-2005 and 2006-2007 respectively. Firstly,we adopt the descriptive statistics such as traditional T test and chi-square test for the single-factor analysis, in order to study the differences of financial situation, characteristics of CPAs and the difficulty of modification between different groups, then through the Binary Logistic regression analysis of multi-variables to analyze the comprehensive effects factors.The result shows that CPAs tend to switch the opinions from qualified opinions to unqualified opinion with explanatory or emphatic notes. In addition, we discovers that the audit opinions modification is not only influenced by single factor, but also affected by the comprehensive effects of the factor of financial situation, characteristics of CPAs and corporate governs. The previous audit opinion shows strong continuity; The effect of initiative auditor changes is't remarkable; Meanwhile, the top10 CPA firms have small possiblity to modify opinion and dare to "tell the truth"to some extent. The size of the CPA firms determine the independent status to large extent; Companies with rising earnings management are easier to modify opinion. Audit Opinion Modification and the Majority Shareholder Control (Z ) Showed significant positive correlation,so we discovers that the Share Segregation Reform have greate influence on Audit Opinion Modification.