Auditor Change

Maintaining the relationship between auditors and the audit client means to achieve the minimum costs of both sides. Whenever the costs of either side changes, the relationship comes to the end, and that will lead to the switch of the auditor. The research of auditor switch at abroad is increasingly mature, but for domestic research, especially research about auditor resignation is scarcely.Every year, more than 200 listed companies in China have switched accounting firms, of which nearly 100 companies switch their accounting firm from Big 4 to domestic firms. The reason itself of switching from the high reputation and quality of Big 4 to domestic accounting firm can be very interesting which is worth of studying, and this paper finds that it is not listed companies that dismiss Big 4, but Big 4 which resigned from their clients.Big 4 have developed in China for nearly twenty years. Since the entering into the audit market in the early 90s of last century, they had expanded quickly in China. But with the improvement of Chinese securities market and law, Big 4 now are facing severe credit crisis. Therefore, Big 4 decide to adjust their development strategy which concluding the composition of the clients and business. This paper studies the how Big 4 adjust their composition of the clients. That is which client that Big 4 attend to choose or resign from.After reviewing the related papers about auditor switch, this paper use the data from listed companies which has switched the accounting firms and use the Logistic research method to analyze. The result shows that Big 4 prefer to resign from the clients which are deficit and whose audit opinion are not good last year. What's more, the study finds that audit fee is the key fact for choosing or abandoning the clients. This is the creative point of this research. It also demonstrates that it is not listed companies that dismiss Big 4, but Big 4 which resigned from their clients.Finally, according to the result of empirical research, this paper provides some suggestions for the development of domestic accounting firms and Chinese audit market.