The Relationship Of Audit Firm Size And Audit Quality

Independence is the core of the accounting firm professional ethics, and the audit quality is based on the fundamental accounting firm survival. But there is not to a perfect measure of the standard to give the immediate evaluation, because the audit quality is a virtual induction experience. In the audit market, demanders are constantly choosing the judgment standard to test this practice ability. The firm scale as one of substitution variables, which is be giving more and more attention by researchers.Every year, there are lots of policies and files to encourage the development of accounting firm in2007to2009.In the correct guidance of China’s policy of encouraging related department, there is a new round of M&A merger boom in China.At the same time, the gap between firms in China and the Big Four who are the synonym of the high quality is becoming smaller. The exploration in the scale of the industry has preliminary achievements. How to construct the the audit in our country market size accounting firm the coexistence of market structure, so as to give full play to the market competition mechanism is an urgent problem to solve. This paper is a study in the context above.The structure of the paper is arranged as followsIn the first part, we introduced the research’s purpose, method, process and working, the document’s source, the frame of the theory and the thesis.In the second part, we reviewed the literature over the audit quality and audit size. We first define the concept of audit quality; The second part is audit quality related literature review; Thirdly, we reviewed and summarized the literature of the accounting firm scale to measure; Finally we review and summary the literature of the relationship of the firm scale and audit quality.In the third part, We analyzed theory. Related theory includes: Principal-Agent Theory, Economic Man, Supply-Demand Theory of Auditing market, Internal angency cost Theory. We used Principal-Agent Theory to explain the reason of Auditing firms; We used Economic Man to explain the essence of Auditing firms; We used Supply-Demand Theory of Auditing market, Internal angency cost Theory to explain the relationship of Audit firm size and audit quality.In the fourth part, We analyzed the present situation of Auditing firms in our country. We used the number of Chinese Certified Public Accountant and the income of the Accounting firm to compare the TOP100public accounting firms and not-TOP100and Big Four. We have arrived at a conclusion that the scale of Auditing firms in our country is smaller. At last, we analyzed the the global international question of Auditing firms in China.The fifth part is the Empirical Analysis. In the first, we raised the research proposition. Secondly, we divided the scale of Auditing firms according to the Big Four and not-Big Four. Then, we constructed a model to analyze multiple regression. Thirdly, we divided the scale of Auditing firms according to the Big Nine and not-Big Nine bye Cluster analysis to research propositons.In the last part, we summarized the conclusions, and pointed out the limitation and the orientation for further research. We also gived relative suggestions at last.