Effects On Audit Market Structure And Audit Quality Caused By The Merger Of Accounting Firms

In recent years, the development of China’s market economy is continuous, China hasto overtake Japan to become the world’s second largest economy. CPA has played a pivotalrole in this process, and it also continued to develop and grow. Secondly, the influx ofInternational Big Four Accountant firms is continuous, and they seize the market with localfirms, they have an absolute advantage, many domestic enterprises identity the view " theFour Accountant firms represent high audit quality". TO compares with this, the traditionalnational accounting firms’ audit services can not meet the needs of the modern market. Inthis context, the Ministry of Finance’s continuous introduce strong policy to encourage theaccounting firms to expand the scale by merging to achieve "bigger and stronger.""Powerful combination, bigger and stronger," which has become a major theme of ChineseCPA industry, it also has become the focus of the industry stakeholders’ discussion.In this paper, I combine normative method with empirical research method, on thebasis of the accounting firm merger-related literatures and theoretical analysis, I select12domestic accounting firms’ merger in2009as the research object. Firstly,I preliminaryanalysis that after the the merger, the changes of firms’ CPA, business income and thenumber of listed companies customers, immediately I research the changes of auditingmarket structure after the merger. Finally, I select the client companies of this12accounting firms audited in2007-2012-year period as samples, I use descriptive statistics,correlation analysis and multiple regression analysis method to empirical study the impactof merger accounting firms on audit quality.After the research, I get the following conclusions: After the merger, the number ofCPA, revenue and the number of listed companies customers of the majority accountingfirms’ are increased, this indicate the size of the merged accountants is increased. Second,the merger increases the concentration of the audit market, the competition between largeis more balanced. Finally, the combined firm’s audit quality has gradually increased; The operability accrued profits of listed companies audited by the combined accountants firmslower than non-merged, indicating that compared with non-merger, the combined havehigher quality audit; Compared new-merger with absorb-merge, the latter improve auditquality more significant. Thus, the accounting firms bigger and stronger effect is noticed.