The Study On The Correlation Between Audit Firm Size And Audit Quality

In the modern society of economic globalization, China’s reform and opening up gradually strengthened, some large group of companies began to enter the Chinese market. However, in the Chinese audit industry, the domestic accounting firms do not have sufficient capacity to undertake large-scale audit services, "Big Four" accounting firms have dominant position, after the "Big Four" audit some large companies which may involve state secrets, to a certain extent, that affect the stability of economic development.In June 8,2012, AICPA issued a policy measures to support the accounting firms bigger and stronger, pointed out six key development direction and proposed specific measures to promote audit firms bigger and stronger. In a series of policy support, domestic audit firms have been rapidly expanding through mergers, restructuring and other means, This drives our audit firms bigger and stronger, promote the domestic firm to build brand. In the process of development of large-scale firms, we need to consider the following questions:In our current audit market environment, whether has a positive correlation between audit firm size and audit quality? Whether has a significant difference between the four major international and local firms?In this article, I analyze the accounting firm’s audit quality from the perspective of earnings management, and study the correlation between scale of the accounting firm and audit quality. This paper selects the 2010 listed companies as the research sample, these companies are from the 2010-2012 Shanghai A shares, and the Shenzhen A-share listed company on the Main Board, Our accounting firm will be divided into three categories:"Big Four", "top ten", "domestic non-Ten." The study found:audit quality of "Big Four" accounting firms is higher than audit quality of the "top ten" and audit quality of "domestic non-Ten" accounting firm; audit quality of "top ten" accounting firms is higher than audit quality of the "domestic non-ten "accounting firm. Research results show that scale of the accounting firm can improve its audit quality. Of course, in order to truly become a powerful accounting firms, accounting firms should pay attention to post-merger integration, improve the quality of audit staff, strengthen internal management firm. In addition, the government should strengthen supervision, increase penalties for violations and improve audit quality.