An Empirical Study On The Effect Of Combination Of Accounting Firms Audit Quality

Through many years’empirical research and theoretical analysis, ithas beengenerally accepted that the auditing quality of one accounting firm is judged by its scale to some extend. Therefore, the auditing fee usually has been associated with the scale of accounting firm. In China, comparing with domestic accounting firms, the auditing fee usually has been charged more by PwC, Deloitte, KPMG and E&Y,(short for "Big Four"). The Big Four has been staying the position of monopoly in China’s auditing market, which not only influences the development of domestic accounting firms but also makes China’s auditing market go downhill gradually.Hence,some organizations, heading with the Ministry of Finance and Chinese Institute of Certified Public Accountants, promulgate a series of policies, such as "Suggestions for improving domestic accounting firms in China (2007)"and "Recommendations for accelerating development of certified public accountant in China", in order to support the merger of and enlarge the scales of domestic accounting firms. The Big Four all have been experienced a large amount of mergers and corporate merger is the most direct method to enlarge seale.The merger of the Big Four is the natural progression of enterprise developent promoted by the market economy in western developed countries, while the merger of our domestic accounting firms is led by certain policies. Accounting firm itself is entetprise,will it be successful to obtain a good merger and decrease the auditing cost? In this article,mergers of domestic accounting firms from2009to2012were acted as objects and some listed companies audited by them were taked as samples of study,analyzing the impact of whether to merge,how to merge and the motivation of merge the accounting firm in our country on the audit quality respectively by empirical panel data analysis.The conclusion is that the merger did not have obvious effects on auditing quality in2009, however, through the integration of culture system for three years, the auditing quality has been improved observably and the effects of newsettings merger have been more prominent. Meanwhile,through comparing the demonsration result of mergerbetween two years, it shows that the mergerin2012is more efficient.Earnings management was able to be restrained and more non-standard auditing opinions were provided in short time. All in all, it illustrates the conclusion that the merger based on natural market economy are more efficient than those formed under certain policies.