A Study On The Correlation Between The Accounting Firm 's Consolidation And Auditing Charges

In October 2009, China’s Ministry of Finance promulgated the opinions on accelerating the development of China’s CPA industry, aiming at encouraging the firms to "optimize combination, merge and reorganization, powerful alliances, promote leap-forward development of the industry. "This policy is designed to encourage public accounting firms to merge, and promote a strong merger, gradually realize our strategic objectives of our local firms "bigger and stronger",and gradually narrow the distance with the "big four", making our local firms "go out" and tend to be more internationalized. Before and after the policy, there are quite a few local firms merged, so accounting firms combined have raised widespread concern in the community and became a focus of the CPA.After the firms merge and the Merge Agent correlation were sorted, analyzed, We promote China’s certified public accountants’ firms merged category comes down to two main factors:one is market demand, Which is a major cause of foreign firms to merge, the other is motivation of the policy guidance,Which is a unique motivation of our merger. In addition, Audit fee is certified public accountants and auditing service demand both sides after the game, which is a price that they reached consensus and can be used to measure whether the accounting firm price competitive advantages. Therefore after the accounting firm merger, changes in audit fees may reflect the effectiveness of the merger, reflecting the combined effect.In this paper, our study point is the government issued the policy of encouraging firms merge in October 2009, we select 4 cases as study object and select the 2007-2013 of the Shenzhen-listed company data as a research sample. Based on theory of industry organization, insurance, reputation effects and development, research hypothesis is proposed. Because it aims to evaluate the effect of policies, we select DID model, divide experimental subjects into treatment and control groups, select unincorporated local accounting firm as a reference group for the double-difference analysis, aiming at analyzing the mergers impact on the audit fees; Then choose International’s "big four" served as a control group analyses, the gap between audit fees of CPA firms merge to the test results can test validity of government merger policy.Innovation of this paper is:First, based on the background of the special system of audit market in China, it both studied the accounting firm affect on the audit fee,and tested the effectiveness of the government’s policy which encourages to merge the firms. Not only it enriched some research, but also provided data and empirical evidence for the government. Second, we use a dual difference analysis method as the empirical research methods, this method divides the object of study into the control group and experimental group and considers the differences which is existed previously between two groups, So it makes up for the inadequacy of purely for comparison and makes research results more scientific and precise.Analysis of the empirical results show that China’s accounting firms merger makes its audit fees rise. But combined with international’s "big four",the large gap still remains. Optimism is that local firms have the trend that gradually catch up with the International’s "big four". Therefore we continue to follow this trend, our domestic accounting firms will gradually grow.