A Research On The Effect Of Sharing A Common Auditor With The Client On Audit Quality And Audit Efficiency

For a long time, the academic community have made unremitting efforts to explore how to improve audit quality and audit efficiency based on improving the independence of audit and strengthening the audit professional competence. However, most studies have been caught in the inadequatelogic routines which can not take into account the audit quality and audit efficiency. Fortunately, the supply chain provides ideas and space for further exploration of audit quality and audit efficiency.This paper examines audit quality and audit efficiency from the perspective of supply chain.Based on a systematic review of relevant research at home and abroad and along the line of "theoretical analysis- empirical research- suggestion",this paper empirically examines the topic "A Research on the effect of sharing a common auditor with the client on audit quality and audit efficiency" based on the data of public companies in China stock market from 2003 to 2014 which are matched by PSM.We find that the common auditor reduces discretionary accruals, and this common auditor effect is more pronounced in the situation that common auditors come from the same region. When the auditor provides audit services both to suppliers and its main customers, audit report lag is shortened,and as a compensation for the specific knowledge of supply chain and high audit quality,the auditor charge premium from audit clients, which improves the efficiency of the audit. Furthermore, the effect of the common auditor is not significantly associated with whether the supplier and its major clients are from the same industry, and has a negative correlation with the strength of other supervisory mechanisms of the supplier. The conclusion of the study provides empirical evidence for improving the existing audit system and corporate governance.