The Punishment And Auditor Changes Of The Listed Firms

In recent years, illegal behaviors widespread in China’s securities markets. A series of major fraud cases occur, such as "lam tin shares","silver metal","kelon electrical" and so on. The cases seriously harm the interest of the social public, hit investor confidence, bring negative impact to the healthy development of the securities markets. Violation like listed company information disclosure go unbridledly. Auditors, known as the "economic police", undertake responsibility of quality verification of auditing of financial and accounting information the companies provide. Auditors don’t keep their professional cautiousness, fail to find existing material misstatement, omission, fraud in clients’ financial reports, issue the unmatched reports, thus infringe stakeholders’ interest. In order to improve the auditing quality, protect investors and the public interest, companies punished by illegal behaviors shall change auditors, employ auditors of a higher professional level and a higher independence, so as to get auditing reports of higher quality.Through literature and theoretical review of auditor change and illegal punishment, this paper puts forward its own argument based on the existing research conclusion, make the research design, data of screening and choice of research method. The paper, based on data of listed firms which was punished by China Security Regulatory Commission (CSRC), Shanghai Stock Exchange (SSE) and Shenzhen Stock Exchange (SZSE) for the reasons of the deregulation of auditors from2002to2009, first analyze the data of the present situation of our country, then research on the choice of the listed company after being punished and what this choice brings. After the information disclosure of the listed company being punished, whether will the company be more apt to replace the auditors? Whether the auditing opinion of previous year have a significant influence to the replacement of auditors? Whether further study of listed company being punished to replace the auditor can effectively restrain being punished again?Research shows that compared to nonpunished firms, the punished firms punished prefer to change auditors; compared to nonpunished firms which given nonstandard audit opinions last year, the firms which given the standard audit opinions prefer to changes auditors. As for the punished firms which given the standard audit opinions, this kind of behaviors of changing auditors, can effectively restrain themselves from being punished again.