Auditors’ Fame, Quality Of Accounting Information And The Market’s Reaction

Accounting information is the main source of information in capital markets, the quality of accounting information disclosed by the company is vital for stakeholders. As an important part of the quality of accounting information assurance and supervision, audit quality level is of concern to people. That audit quality is difficult to measure makes auditor reputation a signal of audit quality and makes it play an irreplaceable role in the audit market.Usually, people think that the big four international accounting firms’audit procedure is more standardized and strict, and therefore may have relatively higher audit quality. However, they lack of consistency awareness of other firms’audit quality. In2003, the Chinese Institute of CPA started the publication of top100ranking accounting firm, which is based on firm business income and the number of certified public accountants. In2006Chinese Institute of CPA improved the appraisal approach, in which comprehensive evaluation method was adopted. So far, the comprehensive evaluation method has gone through six years, has the places in the ranking list caused a significant reaction in the audit market? In this article, firstly learn from the existing literature researching on the reputation of Auditors, we use the profitable correlation coefficient of the value of the company to study if there is any discrepancy between the big four international accounting firms, big accounting firms interiorly and other accounting firms. Then we use the Top100ranking announced by the Chinese Institute of CPA as auditor reputation substitution variables, the cumulative abnormal rate in5days around the Annual Report as the reaction of the market. In the end, the study found that the international "big four" and the domestic "Big Five" own a significantly higher audit quality than other accounting firms, among the top100accounting firms, the highest-ranked firms are gradually establishing good reputation mechanism, and the market give its listed companies positive reaction, while the rest part of the top100accounting firms is lack of information to stakeholders.