The Effect Of Reform Of Audit Firm Structure On Audit Fees

Because the goals of bigger and stronger, the organizational forms of Accounting firms is no longer limited liability. Beginning the year of 2010, the special general partnership becomes the popular trend gradually. China’s Accounting firms have all complete the conversion before the end of 2013. After the restructuring, legal liability and litigation risks will increase, thus will affect the behavior of the audit fees.There are three theories in this paper, Usually we call them risk and reward, investment and output, and audit pricing theory. We can know the influence of firms between restructuring policy and audit fees clearly by introducing this three theories detail. I introduce two aspects to study the question, so that there is not only vertical analysis but also horizontal analysis. The study is divided by batch conversion in the vertical analysis, and the date comes from the year of 2010, 2011 and 2013. Through this research we can know that, in spite of the audit fees will increase after the transformation, but the time of change between audit fees and the form of organization is not the same. In addition, the degree of change between large firms and small firms is not the same, and the later have a more obvious change than large firms. In Horizontal regression analysis, a new model is introduced which is called double difference(DID) model usually. This study tells us audit fees will increase after transforming to a special general partnership firm.This article have innovation on the methods. In the vertical analysis, the research conducted with different restructuring batches, each batch select date from 4 years which is before and after restructuring year, so that there are six groups among the every research. And we introduce a new point of view which is called the size of accounting firms, so that the study is more comprehensive.