A Study On The Correlation Between Audit Cost And Audit Opinion Purchase Behavior Of Chinese Listed Companies

China’s GEM, which is a major breakthrough in the capital market of China, was formally established and traded in Shenzhen Stock Exchange in October 2009. However, during 5 years of operation, phenomena such as executives resign and major shareholders selling large-scale stocks were happened frequently, which indicated that the listed companies may provide false financial statements. In addition, successive burst of auditing scandals made the public doubt the independence of CPA since the beginning of the 21st century. China’s capital market, listed companies and the CPA industry will suffer great strikes once audit opinion shopping spread to the GEM. This paper will focus on whether the listed companies on China’s GEM are implementing the audit opinion shopping by the audit fee or not by document analysis, theoretical analysis and empirical analysis, and some countermeasures are putting forward to avoid audit opinion shopping in GEM listed companies to a certain extent.Firstly, this paper analyzed the characteristics of China’s GEM and listed companies, the theoretical basis and mechanism of audit opinion shopping by literature review. Secondly,720 companies were selected as the samples for empirical research listed on China’s GEM from 2010 to 2013. The data was grouped according to the abnormal audit fee rate of change and the result showed that:Audit fee and audit opinion shopping had significant correlation when abnormal audit fee rate of change is greater than or equal to 0; When the GEM listed companies’abnormal audit fee rate of change is less than 0, the data could not be analyzed because the dependent variable and one of the independent variable are identical, which would result in the underestimate of audit opinion shopping; No significant correlation could be found by analyzing all the sample data. After using Binary Logistic regression to analyze the data which showed significant correlation, the correlation was found between the abnormal audit fee and the audit opinion, and abnormal audit fee asset ratio are positively correlated to modified audit opinions. Moreover, the GEM listed companies received modified audit opinions for the first time in line with the regression results, which indicated the independence of the Audit industry in our country had also been enhancing as the supervision of government regulators continue to strengthen in recent years. Last but not least, this paper put forward some corresponding proposals to the GEM listed companies, the CPA industry and the national regulators according to the results.