Empirical Research On The Effect Of Punishing Illegal Listed Companies On Auditor’s Behavior

In recent years, a lot of listed companies have been punished by the China SecuritiesRegulatory Commission, the Shanghai Exchange and Shenzhen Stock Exchange. The listedcompany’s irregularities will cause stock price’s volatility, be harmful to the interests ofinvestors, and crack down on investor confidence. That’s not conducive to the healthy andstable development of China’s capital market. If listed companies were punished, it will causetracking supervision by the relevant departments, and have a high level to be punished againrelatively. The accounting firms assume a higher level of audit risk to audit the companies. Ifthe audit failure happened, the auditor may have to accept the civil penalties, administrativepenalties, but also face serious criminal penalties. Therefore, while auditing the listedcompanies, auditors should make appropriate choices to reduce or transfer the audit risk. Ithas some practical significance to explore if auditors will really take the appropriate solutionsto avoid the risk the caused by the punished listed companies in auditing practices. The paperalso widened studys of the consequences caused by the listed companies’ illegal behavior inthe academic. Studying the effect of punishing illegal listed companies on auditors’ behavior,this paper hope to improve the degree of auditors attention, as well as the extent to play a rolein the capital market, causing the attention of the listed companies, reduce the quantity offinancial fraud behavior in the stock market, and participate in market competition in fair,strict compliance with relevant laws and regulations.The paper utilizes the method of combining normative and empirical research, and takesthe punished listed companies as key point to analyze its impact on the behavior of auditors.First, the paper described the research background, and review of relevant literature, on thebasis of analysis and reference of the existing literature’s results, proposed the significance ofthis paper. Secondly, the paper uses the signal transmission theory and the deep pocketstheory to analyse the impact of punishment due to listed companies’ irregularities on auditors’behavior. The auditors may issue a more cautious audit opinions in order to reduce thelikelihood of audit failure, or to charge higher audit fees to make up for the litigation and lossof reputation in the future. Finally, the paper used empirical research methods, took the sample of all listed companies be punished by the China Securities Regulatory Commission,Shenzhen Stock Exchange, Shanghai Stock Exchange from2001to2010as the referencesample match with the sample of the listed companies of non-punishment, receive thehorizontal comparison sample. The paper took all financial data of listed companies bepunished by the China Securities Regulatory Commission, Shenzhen Stock Exchange,Shanghai Stock Exchange from2001to2010as the longitudinal contrast sample. And thepaper designed the empirical research model, use the data analysis software to receive theresults, concluded that if punishment of listed company will affect the audit opinion issued bythe auditor or audit fees. Discuss the information content of the listed company be punishedand of the degree of punishment. Trying to serve as a warning of listed companies, and makepolicy suggestion and related advice.