A Study Of Accounting Firms ' Mergers On Audit Market Performance Based On Multi-dimensional Perspectives

In order to adapt to the needs of rapid development of China's socialist market economy, meeting the market demand for diversified services of Certified Public Accountants and actively responding to the completion in the market of international accounting, Chinese CPA Association issued a “Views on the promotion of accounting firms to become bigger and stronger” in May 2007. The opinion proposed that our country would develop 10 international accounting firms which are able to serve the Chinese enterprises with “going global” strategy and provide comprehensive professional services for multinational operations; and also develop 100 large accounting firms which can provide large enterprises and enterprise groups with comprehensive professional services. The introduction of the opinion means that the discussion of the problem about accounting firms' becoming bigger and stronger has transformed from its necessary to how to become bigger and stronger. To make accounting firms become bigger and stronger, in addition to their own development, an important way is firms' merger. So, local accounting firms in China set off the third time merger wave following the year 1999. The third wave of merger has been past a few years, how the result is needs deeply study. So this dissertation studies the impact of accounting firms' mergers on audit market performance and selects the cases of third wave of local accounting firms' mergers as study objects.This dissertation studies the impact of the accounting firms' mergers on the performance of audit market based on the industrial organization theory, forming Multi-dimensional perspectives which contain the structure of audit market, audit fees and audit quality. The method used to study the impact of the accounting firms' merges on the structure of audit market is mean method, comparing about the changes of structure of audit market. The result shows that market concentration, the scale of economies and industry expertise have improved after accounting firms' merges. The methods used to study the effect of accounting firms' merges on audit fees and audit quality are descriptive statistical analysis and regression analysis. To make the result more accuracy, this dissertation takes the innovation on screening variables selected. The method used to screen the variables is the combination of correlation analysis and maximum noise variance method. Firstly, this dissertation analyzes the correlation between each variable using correlation analysis, and then analyzes the importance of dependent variable to independent variable using maximum noise variance method. Lastly, screening variables which are important to the independent variable between those variables with high correlation,using secondary screened variables to implement regression analysis. The result of the study about the impact of the accounting firms' mergers on audit fees shows that firms' mergers improved audit fees and the result of the proxy variable of accounting firms' mergers named firm-scale also shows that accounting firms' mergers is helpful to audit fees. The result of the study about the impact of accounting firms' mergers on audit quality shows that firms' mergers improved audit quality. Finally, this dissertation makes a summary about the results of the research, giving an outlook and research deficiencies.