The Empirical Study Of The Relationship Between Audit Quality And Size Of Accounting House Of Chinese Listed Companies

It is an important topic in the audit research that whether the different sizeof accounting house have different influence on the audit quality of Chineselisted company. Specifically，On the September29in2006，Chinese Instituteof Certified Public Accountants promulgated the"Regulations on accountingfirms to promote the bigger and stronger”. Thereafter，the merger of accountingfirm was increased sharply. In addition，with the rapid development of Chineseeconomy，accounting and audit service market has opened widely，CPA firm istoward the scale and level of direction.So，the different audit qualities amongaccounting house of different sizes is a worthy of discussion.However，in our country，practical and theoretical circles have beencontroversial about the relation between audit quality and size of accountinghouse. So，this paper will choose all the listed companies and their audit firmsfrom2007to2008as the research samples. First，we give a brief descriptionabout the concept of audit quality and size of accounting house，and measureindex and the factors that affact audit quality and the situation of chineseindependent audit quality，from the principal-agent theory， Scale economytheory and Reputation theory to analysing the relation between audit qualityand size of accounting house.Second，from the perspective of the game theorywe will research the behavior characteristics and behavior pattern of betweenthe different CPA，between enterprise management and CPA and betweenregulators and by regulators. Then employ factor-cluster analysis to classify ofaccounting firm，in a certain extent，we expect to identify the big，small andmedium-size accounting firm. The results show that in Chinese audit market，the big accounting house has been formed domestic cooperative firms of theBig4and local biggest firms，the different size of accounting house is notable inscale，that means cluster is OK.On this basis，we adopt cross section ofmodified Jones model to measre audit quality，we makes researches on the influence that the accounting firms of different size have on the earningsquality，by using the method of grouping and contrast. From the perspective ofDescriptive statistics analysis and Multiariate analysis to analyse. The resultsshow that audit quality of listed company and size of accounting house is notsignificantly positive correlation，at the same time，we analyse the reason ofnot significantly positive correlation. Finally，this paper put forward the adviceto Perfect CPA firm scale development. Mainly from Perfecting the relevantlaws and regulations，increase punishment strength and accelerate the reformof the organization system of CPA, establish limited liability partnership’s statusand perfect internal management mechanism of CPA and support and guidethat has certain conditions of the accounting firm scale development toimprove the audit quality.