Research On The Quality,Relationships And Competitiveness Of Accounting Firms

With the further opening of the domestic audit services market, a number of international accounting firms have been involved in the audit competition in China. In recent years, facing the fierce competition in the audit market, to promote the developing and upgrading of the competitiveness of Chinese accounting firms, Chinese Institute of Certified Public Accountants(CICPA) issued a series of guidance documents, and has launched a lot of strategic measures, such as brand strategy, training strategy, etc. Therefore, studying on the factors, especially the key factors, affect ing the competitiveness of accounting firms will considerably help enhance the competitiveness of accounting firms in China.Firstly, this paper gives the definitions of audit quality, social relations hips, and accounting firm’s competitiveness, and then analyzes the current situation of the development of the C hinese accounting firm competitiveness. Secondly, based on the Principal- Agent Theory and the Relationship Marketing Theory, this paper theoretically analyzes how the audit quality and social relatio nships of an accounting firm affecting its competitiveness. After that, combined with hierarchy of needs theory, further comparative analysis has been done to solve the question which one is the most significant factor to CPA firms, audit quality or social relationships? Then research hypotheses are proposed. Thirdly, on the basis of theoretical analysis, the multivariate linear regression model was constructed, using the data of Chinese listed corporation from 2012 to 2014. The model puts the accounting firm’s audit quality, customer relations, political relations and regional relations together. Finally, for the full sample and sub-samples of each variable were performed descriptive statistics and regression analysis. This paper examines whether audit quality or social relationship is the main factor of competitiveness of accounting firms.The empirical results show that there exist significant positive correlations between audit quality, political relations regional relations and competitiveness, and that there exists a significant negative correlation between customer relationship and competitiveness. For the top ten accounting firms, the main factor affecting competitiveness is the political relations. For the non-top ten accounting firms, however, the main factor is the quality of the audit. According to the conclusions above, this paper considers that accounting firms should improve their competitiveness from the following aspects:(1) Improving the quality and level of audit services;(2) Establishing new customer relationships;(3) Taking advantage of political relations legitimately. In addition, this paper suggests that the regulators should take some measures to promote the healthy development of the industry, such as creating an orderly competitive audit market environment, improving the CPA professional ethics supervision mechanism, guiding the accounting firms to evaluate their audit quality.