China's Research To The Influential Factors Of Audit Pricing

Because of audit service’s complex pricing mechanism, audit pricing has always been a hot research object both in domestic and abroad academia. Through studying the factors of auditing pricing and its trends in the decade of China, the paper may provide some reference for the accounting office’s audit price determination, audit quality improving and audit pricing supervision. On the basis of the existing domestic and foreign theory, empirical model and China’s reality, combining the methods of the theoretical research and empirical research, the paper constructed two audit pricing models of China’s A share market, which are measuring audit pricing from two perspectives:the audit fee and the ratio of audit fee. Then the long-term trends of the A share market audit pricing are studied. The sample is China’s A share companies in2001-2010, and many analysis methods are used:descriptive statistics, Correlation analysis, multiple linear regression, co-linearity test etc. After studying, the following conclusions are found:(1) the ratio of audit fee is a better measurement of audit pricing then audit fee, that is the ratio of audit fees is more suitable to represent the "price" of audit service.(2) There are four main factors that affect audit pricing:audit cost, audit risk, the brand of the accounting office and market competition. The most important factor is audit cost, containing the scale of the company, audit complexity, company location, company’s industry. Audit risk has some effect on audit pricing but the effect is not very significant. The office’s brand has significant effect on audit pricing. Both big4and big10have obtained higher price premium. Market competition also has significant impact on audit pricing.(3) The following evidences are found in the trends of A share audit pricing in the decade:with the change of time, the factors impacted audit pricing changes; both the new accounting standard and new auditing standard have little impact on China’s A share audit pricing; the merger of domestic offices has improved competitiveness and coursed the rising of the offices’ audit pricing; as the rapid development of China’s economy, the big4’s audit pricing is increasing while the domestic office’s audit pricing remains the same; both the big4and domestic offices’ audit pricing is decreasing because of the financial crisis.