A Study On The Factors Of Impacting Auditor Dismissals

Due to the short history of the development of China’s capital market and theinstitutional environment，the management authority of the listed companies replacedthe role of possessors who hold the power of CPA appointment, dismissal and auditremuneration. This makes the auditors who is the main supplier in auditing market ata distinct inferior position in the game with the listed company. When the legalenvironment is weak, audit market has excessive competition or the managementauthorities are driven by some interest, they are likely to abuse of power so that theycan change the audit opinion or cover the false financial information by replacing theauditor. According to statistics, the number of change auditors of listed companies hasincreased from27in1997to312in2011, which contains the normal auditor change,but there is also a lot of listed companies change their auditor for bad intentions.Malicious change of auditors will produce a series of adverse consequences. Firstly, itlead to the poor quality of the information in securities market which will hurt theconfidences of investors in the securities market. Secondly, since the independent andhigh-quality auditors refused to meet the needs of customers at the expense ofsacrificing the quality of audit, a number of listed companies will keep at a distancewith these audit firms, while the independent audit firms occupy most of the marketshare, triggering the audit market appears the "lemon market" phenomenon.With the improvement and development of the securities market, the auditenvironment has changed a lot, the factors of dismissing auditors may also changed,so the study of influencing factors in last few years is significant. In this paper, wechoose the A-share listed companies between2009and2011as samples, use thelogistic model to study the influencing factors of the dismissal of the auditors, get theconclusions as follows: Poor institutional environment strengthen the uncertainty ofthe listed companies and their auditors relationship, the more backward theinstitutional environment of the regions, the more frequent the listed company change their auditor; if the company got public punishment by the relevant regulatoryauthorities, they tend to replace the auditors to improve the quality of financialreporting in the following year; if the company got non-standard audit opinions in theprevious year, they tend to change the auditor to achieve a better audit opinion; thecompany in financial distress trend to change the auditor.The paper is divided into six parts, the first part is an introduction. This partintroduces the research background, significance, research methods, framework andthe innovation of this paper. The second part of the paper summarizes the relevantfindings of other research scholars at home and abroad, then put forward the researchideas. Part three defines the meaning of the various types of auditor changes andintroduces the current situation, and then expounded the theoretical basis of thechanges from the audit contract theory and the theory of signal transduction, and thenput forward the assumption of this article. Part four is the research design section, weselect the appropriate explanatory variables and control variables, and construct thelogistic regression model of auditor dismissals influencing factors. The fifth part usedescriptive statistics, independent samples T-test and logistic regression analysis testthe relevant variables, after the analysis of the empirical results we use the robustnesstest to determine the stability of the empirical research. Part VI describes the mainresearch conclusions, the related regulatory proposals and the limitations of thisstudy.