The Effect Of Low Balling To Firm Practice Quality

Since June 2012,the Chinese Institute of Certified Public Accountants issued " regard to support several policies and measures of the certified public accountants stronger and bigger", clearly ” put forward to encourage and support the development of firm and stronger do big goals, the number of accounting firms in the following few years rapid expansion, but as a result of excessive expansion and the lack of effective integration and coordination effect, after the merger to provide breeding space for independent audit of opportunism. The low balling have gradually evolved into a vicious price competition in the Chinese audit market, have not to allow to ignore to the influence of the external audit the professional quality of the industry, and even affect the sustained and healthy development of industry. But at present, many domestic and foreign literature are stay in proving the relation of low balling and practice quality, and not according to the different market environment assures forms at a lower price for effective analysis, put forward corresponding low balling of definition in the competitive environment. The purpose of this paper is to try discussion in China’s capital market environment, low balling has gradually evolved into a demand form, and to test low balling impact on audit quality, through high quality auditing demand and firm reputation maintain two Angle, research on the influence extent of audit quality, low price assures to method to explore the inhibition of low audit quality assures damage. Therefore, on the basis of summarized the Chinese and foreign various research literatures, this paper puts forward the following three hypotheses, respectively(1) the behavior of low balling to reduce the auditor quality, highly competitive in the Chinese audit market and homogeneity serious, certified public accountants to obtain new customers resources, with competitive price lower than other competitors to demand a prompt replacement of certified public accountants audit, based on validation low-priced assures the Chinese market environment and the relationship between the audit quality. Then put forward the assumption(2) the presence of low balling, practice quality of the "top ten" branch office better than not "top ten" branch’s to reduce the extent of the lower, so that they can verify the firm to maintenance of reputation can effectively reduce the affection of low balling to practice quality;(3) the presence of low balling, the practice quality with state-owned enterprises as the object of audit than non-state-owned enterprises as the object of audit to reduce the extent of the lower, so that they can verify the market demand for high quality audit can also reduce the influence on low balling to practice quality. The study to explore how to suppress the reduction of low balling to practice quality to provide new ideas and methods, so that they can in the process of firm’s rapid expansion, to keep the practice quality. To a certain extent, protect the social fairness.