Market Competition Structure,audit Firm Size Andaudit Quality

Independent audit of the social and economic development plays a very important role, but the audit inorder to play its due role, we must first have a reliable audit quality. High quality audit services not onlyessential for the healthy development of the economy, Also registered a solid foundation for the existenceand development of the accounting profession. However, the relationship between the size of theaccounting firm and its audit quality has been the theory and practice in a highly controversial topic. In thispaper, through the perspective of the firm’s competitive structure of the market "scale-quality ’association,combined with the status quo of China’s competitive market, revealing the market competition structure,the size of their firms audit quality intrinsically linked. This helps to promote auditing theory on firm-conclusion "mass scale" relationships as well as our differences driven by the government-led firms biggerand stronger strategic depth reflection.Firstly, through research on a comprehensive analysis of literature, the market competition structure,the theoretical basis of the relevant firm size and audit quality, based on the Shanghai and ShenzhenA-share listed companies of2002-2012financial data samples, combined with our specific institutionalcontext, the use of normative and empirical research method of combining, on the scale of its audit qualityand firm competitive market structure affects firms’ scale-quality "of the relationship between empiricaltest.The empirical results show that:(1) firm size and audit quality is positively correlated with respect tosmall-scale firms, larger firms tend to provide higher quality audit services;(2) product market competition(PMC) was positively correlated with the quality of the audit firm, that the fierce market competition (PMC)to help strengthen the supply of high quality audit firm, but the product market competition (PMC) does notreflect its positive reinforcement effect-"quality scale" positive association (PMC*BigN) to firms, Thismeans that the product market competition (PMC) to optimize treatment effects on the audit market doesnot even exist yet effective play, indicating that China’s market is still lagging behind the competitiveenvironment;(3) In the context of special system, the size of the market share and government regulationhas a great relationship, and thus indirectly alter the competitive structure of the audit market, changing thecompetitive structure of the market would inevitably lead to changes in the size and even the quality of theaudit firm. Government regulation did not reflect its firm for-positive impact "quality scale" positiverelationship (Gov*BigN), government regulation would significantly weaken the positive reinforcementeffect of product market competition (Gov*PMC) for audit quality, and thus demand is not sufficient tolead to high quality audit and supply weakness. This indicates that China’s current government interventionis still reflected in more exacerbate the negative effects of conflict Acting Company.