| Based on the view of "quasi-rent", DeAngelo (1981) came up with the famous conclusion that large-size accounting firms represent higher audit quality. It has also become the theoretical basis of a long-term study of the relationship between auditor size and audit quality, and it forms the conclusion that the larger auditor size, the higher audit quality. Under the guidance of this theory, our government supports and encourages accounting firms to develop on size in order to be stronger and larger.However, phenomena in capital market that firms variation greatly, excessive pursuit of size and audit failures still exist. This leads us to wonder:Does auditor size means higher audit quality?DeAngelo(1981) established her conclusion based on two premises:(1)Clients care about the reputation of accounting firms and auditors;(2)It is on the basis of the whole accounting firms for large-size and small-size accounting firms to control "quasi-rent". Imagine that if clients don’t leave their current accounting firms even though accounting firms and auditors get punished or their reputation gets ruined, then the potential loss of "quasi-rent" will disappear. That is to say, the function of "quasi-rent" acting as collateral property is gone. Imagine again if we find evidences that prove individual auditors connect closely with "quasi-rent", so it lacks the necessary foundation to investigate auditor size and "quasi-rent" on the level of whole accounting firms. It is the internal agency costs that make the relationship between auditor size and audit quality not be so sure. If these two prerequisites cannot be inevitably established, we have reasons to suspect the logical relationship between auditor size and audit quality.The two research problems of this paper lie in that we review the two premises and endeavour to find evidences that auditor teams do exist and clients’ resources get personalized by analyzing whether, when and how the existing audit clients of four punished accounting firms change their auditing institutions as well as the auditors. Our conclusions support the questioning on the two prerequisites. Also, it demonstrates that the large-size accounting firms are not operating as a whole entity and the size concept of accounting firms is constantly weakening, which shakes the premises of the relationship between auditor size and audit quality. Therefore, whether auditor size and audit quality still remains a positive relationship is doubtful. |
