The Conversion Of Organiazation Form Of Accounting Firm On Accounting Conservatism

In order to improve the competitiveness of our country accounting firm, and realize the accounting firm become bigger and stronger. Chinese government actively promotes the domestic audit firms to change the legal form from Limited liability company to Special general partnership. This phenomenon of the conversion of the organization form of accounting firm caused extensive concern of many scholars and national lawmakers. But the existing literature have the less research about the influence on the company’s accounting conservatism which cased by the conversion of the organization form of accounting firm.On the basis of the review of some literatures at home and abroad, this article employed theoretical analysis of the correlation between the conversion of the organization form of accounting firm and accounting conservatism. In this paper, empirical research and case study method are both used. By selecting data of A-share listed firms from 2009 to 2012,from the point of the conversion of the organization form of accounting firm, using the Basu model, impact on the accounting conservatism in empirical research. The study found that the conversion of the organization form of accounting firm and accounting conservatism positive related, that is to say auditors’legal form changes will increase the listed company’s accounting conservatism. In order to make a more detailed study, this paper also uses the grouping test, about the impact of the conversion of the organization form of accounting firm on the accounting conservatism of state-controlled listed companies and non-state-controlled listed companies, ST companies group and non-ST companies group, and the big four accountancy firms and the domestic accounting firms. This paper draws the following conclusions:(1)The conversion of the organization form of accounting firm is more powerful to the accounting conservatism of non-state-controlled listed companies.(2)ST companies will not improve the accounting conservatism of the conversion of the organization form of accounting firm.But non-ST companies’accounting conservatism will be improved.(3)The influence of auditors’legal form changes on accounting conservatism is different in domestic accounting firms and the big four international accounting firms. The conversion of the organization form of the domestic accounting firm has obviously improved on the accounting conservatism of companies. Because the big four international accounting firms have high scale and high audit quality, the conversion of the organization form has little effect on the accounting conservatism of the enterprise.In the robustness test, we adopted the accrual - cash flow model to examine the above conclusions separately, and draw the same conclusion. The robustness tests show that the conclusion of empirical research is stable. Besides, we put Crowe Horwath public accounting firm as case for research. Through in-depth analysis of the relationship between the conversion of the organization form of accounting firm and accounting conservatism, the artical confirms that auditors’legal form changes really increase company’s accounting conservatism on the micro level.At present, there are very few researches of the conversion of the organization form of accounting firm on accounting conservatism in academic circles of China. Therefore this article enriches the relevant literatures. It also supports the positive effect of auditors’legal form changes will increase the listed company’s accounting conservatism.