The Effects Of The Transformation Of Accounting Firms’ Organizational Form On Opinion Shopping

By the end of year 2013, all of the accounting firms who provide audit service for listed companies have changed their organizational form from limited liability to limited liability partnerships. Existing literature has found the relationship between the transformation of accounting firms’ organizational form and audit quality, whereas the internal mechanism has not been involved. In this study, we examine the effects of the transformation of accounting firms’ organizational form on opinion shopping. We find that the transformation of accounting firms’ organizational form can restrain opinion shopping, especially for partner-switch and audit-fee type. We also find that opinion shopping is less likely to happen if the accounting firm is "Big 10" or the listed company is important to the firm. In addition, the transformation is more likely to restrain opinion shopping if the listed company is not stated-owned. Lastly, the empirical results show that the legal environment of listed company is also a fundamental and objective factor.In this paper, we examine the effects of the transformation of accounting firms’ organizational form on opinion shopping. To some extent, the research enriches the literature on accounting firms’ organizational forms. In practice, our conclusions also provide empirical evidence for policy makers. On the one hand, policy makers can evaluate the implementation of transformation policy. On the other hand, regulators may find new field and key domains of opinion shopping regulation.