Study On The Impact Of Audit Flailure On The Audit Relationships’ Behavior

In security market, the auditor is one of the most important intermediary institutions. In recent years, audit failure which linked to financial fraud happened frequently. It will bring heavy economic losses to the investors, and also disturb the order of the securities market. Even it had a bad influence on the healthy development of socialist economy in our country.At domestic and abroad, the audit failure will not only cause a series of economic reactions in the capital market, but also cause a series of changes on the audit relationship. The audit relationship includes three sides:certified public accountants, audited management units and investors. In our country, the development of the securities market is very slow, and the legal supervision is very weak. In such a special environment, what will happen to the three sides after audit failure?This paper is divided into five parts. The first part is the introduction, including the background, significance and methods of this research. The second part is the reviews of related researches, the writer through reading related researches to understand the focus and level of the related research, finally had found the starting point. The third part is the theoretical foundation and hypothesis, combined the theoretical analysis with the reality of our country, then the writer had propose three hypotheses to explain what will happen to the audit relationship. The fourth part is empirical research, on the basis of the third part to design and build the model, adopt logistic regression analysis and event study. The fifth part is the conclusions of this study, the writer mainly summarized the research results and tried to put forward some policy suggestions, as well as pointed out some directions for later study.