The Empirical Study On The Relationship Between Audit Tenure And Audit Quality

Since the year 2001, a lot of finicial fraud casese have happenedde about listed company in the world. The CPA of industry reputation has been impactede never before, these introduce a crisis of reputation. When people think about why the CPA dose not find the true in the accounting statement, also often want to know the relationship between audit tenure and audit quality. That if the audit renure is too long, it makes the audit quality too low. For that,Out and inside of China has been put up as a useful way to improve audit quality. This useful way is forced rotation.The question has been attentionde by administering authoring, academic circles, practice ciecles.Not question for improve audit quality, CPA,firms of forced rotation have been attentioned.But the way is useful or not useful is not a conclusion. This paper attempts to demonstrate the core of the issue by analyzing related theoretical views and empirical evidences. This study examines whether audit tenure is associated with audit quality. According to available theory researches, whether the mandatory rotation of audit company should been put into effect or not is determined by the whole impacts which it makes to cost, price, market competition and audit quality. Empirical researches had examined the relations of audit tenure and audit quality by various ways. But uniform agreement has not been reached about the mandatory rotation from the theory or the empirical researches.Firstly, the thesis introduces the characteristics and meanings of audit quality, put forward technical and independence characteristics of audit quality. Meanwhile, the thesis put forward these factors influence audit quality, including subject, object, market. And introduce the analysis relationship between audit tenure and audit quality in theory.Hoping ensure the next chapter having a theory basis. About the forth chapter,using the data from 2004 to 2006, as control accrual profit substitute the audit quality. Proved the relationship between audit and audit tenure in empirical. The thesis provides positive data for audit tenure.That audit tenure maybe the effective way for improve audit quality. The last chapter provide some suggestion of audit quality in China.