Empirical Research On The Impat Of Industry Expertise Of Accounting Firms On Market Performance Of Independent Auditing

Independent Auditing industry is of great significance for healthy operation of market economy. In recent years, Independent Auditing industry in our country is developing rapidly by leaps and bounds. On one hand, being driving by Chinese Institute of Certified Public Accountants, a merging wave of public accounting firms is triggered. And the scale of public accounting firms is increasing sharply. On the other hand, according to the new auditing rules implemented in 2007 by the Financial Ministry, the term of industry expertise was introduced. All these provided potential possibilities for the development of industry expertise of public accounting firms. Therefore, in such context, to study the influence of industry expertise of public accounting firms on the market performance of independent auditing is obviously necessary.First of all, this paper expounds the theoretical foundation for the fact that industry expertise of public accounting firms influences the market performance of independent auditing from the perspective of Industrial Organization theory-- SCP paradigm, which believes that as an importance aspect of market structure, industry expertise takes impact on market performance. Based on SCP paradigm, this paper tries to discourse the motivations for the development of industry expertise of public accounting firms through Michael E. Porter's Competition Strategy Theory. Moreover, it analyzes the concept of market performance of independent auditing, upon which two-dimensional measurements of market performance are proposed, that is, audit quality and audit efficiency. By statistics of the relevant data about the listed companies on A share market from 2001 to 2008, through using multiple regression analysis, the hypothesis is verified. It is found that industry expertise of public accountant firm is positive correlated with audit quality and audit efficiency. Generally speaking, industry expertise helps to increase the market performance of independent auditing through enhancement of audit quality.Based on the conclusion drawn in this paper, with reference to other scholars'researches on independent auditing market, this paper finally offer some suggestions to the supervisors of independent auditing and all the public accounting firms. Meanwhile, the defects of this research are summarized, and the prospects of future studies are predicted.