| Enron came to naught from the top five of 500 Fortune in the world, then Arthur Andersen which provided audit services for it implicated by it. What’s more, events of malignant fraud including Yin Guangxia, Zheng Baiwen and Lam shares set off a firestorm in the international securities markets and auditing academia, which draw people’s attention on the listed enterprise’s financial fraud and auditor switch. In China, the phenomenon of auditors switch becomes more common. The number of cases of auditors switch is more than one thousand, which causes a hot academic issue of auditors switch.Through some analysis of these switch cases, we find there is a special form of switching, that is, when the CPA quits, his audit clients will change accounting firm to follow the auditor. Currently, many empirical researches or cases show that when signing CPA switch to the other accounting firm, many firms will switch accounting firm to follow the CPA, which can be called auditor switch with signing CPA’s job-hopping. Current literature about information or economic consequences of auditor switch with signing CPA’s job-hopping is not less, but none about inherent reason to explain this kind of phenomenon. Therefore we not only should know the existence of this phenomenon, but also understand the underlying factors leading to this phenomenon to explore special interests hiding behind this kind of switch and pathways of making functions in the audit practice, thus we can supervise and guide the practice of CPA better. This paper makes in-depth analysis of intrinsic motivation of auditor switch with signing CPA’s job-hopping in the perspective of industry expertise of auditor.This study consists of five parts. The first part is the introduction. The second part is the literature review. We sort literature by factors of CPA’s firm switch and auditor switch with signing CPA’s job-hopping. What’s more, we summarize literature by three factors, which are characteristics of CPA’s firms, customers and auditor. The third is an overview of the theory, which includes the definition of the relevant concepts and elaborates relationship between individual auditor’s industry specialization and auditor switch with signing CPA’s job-hopping. The fourth part is the assumptions from a normative point of view to make an analysis of the relationship between individual auditor’s industry specialization and auditor switch with signing CPA’s job-hopping, then we make basic assumption. And on this basis, we carried out further analysis from the regional perspective. The fifth part include sample selection, selection and related measure, model design, the empirical results and analysis of key variables.This paper shows that correlation of individual auditor’s industry specialization level and auditor switch with signing CPA’s job-hopping is significantly positive. That is, when the signing CPA flows, the higher industry expertise, the greater possibility for customers following their auditor to switch CPA’s firms. Meanwhile, in a further regional perspective, we find that if CPA’s firms and customers are in the different city, the positive correlation between individual auditor’s industry specialization level and auditor switch with signing CPA’s job-hopping becomes strong. What means Off-site audit before auditor flows can strength the correlation between individual auditor’s industry specialization level and auditor switch with signing CPA’s job-hopping.The last is limitation and shortcomings. Meanwhile, we make some suggestions for shortage of regulatory of Chinese relevant laws of CPA’s firms switch and auditor switch, in order to promote reform of laws and make sure healthy development of auditing market. |
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