Audit Firm Size,audit Firm Tenure And Accounting Conservatism

As one of the important indexes to measure the quality of financial report information,conservatism has always played an important role in international accounting standards,and it has clearly stipulated accounting conservatism as one of the requirements to improve the quality of accounting information in China’s Accounting Standards.The principle of conservatism requires that all foreseeable losses and costs should be recorded and confirmed,and incomparable income can not be recognized and recorded.In order to monitor the use of sound accounting policies for listed companies,the world’s Securities Regulatory Commission generally requires a professional competency accounting firm to audit the financial statements of listed companies.However,as a rational economic man,the accounting firm may be for their own economic interests and the consignment of listed companies,the listed companies to take unsound accounting policies for earnings manipulation to silence,so that the interests of the majority of investors are damaged.In recent years,the results of the study of audit tenure and accounting conservatism are increasingly rich,but most scholars tend to study the relationship between the auditor’s audit term and the accounting conservatism,and the relationship between the firm’s term and the accounting conservatism is less,Less scholars from the perspective of the size of the firm to study the relationship between the term of office and accounting conservatism.Since 2001,China Securities Regulatory Commission has been able to encourage domestic auditors to become bigger and stronger for local firms to compete with international competition for domestic and international markets.Large-scale firms are different from small-scale firms in dealing with risks.Therefore,risk control Level is different,the audited units of the accounting conservatism can not be ignored.In view of this,this paper from the firm’s office and the office of the term,the firm size,office tenure and accounting conservatism as the topic of the three topics,learn from existing research results,combined with China’s institutional background and securities market The development of the status quo,through theoretical analysis and empirical research on the relationship between the three in-depth discussion.The paper takes the data of all listed companies in Shenzhen and Shanghai from 2001 to 2014 as the research samples.Based on the reverse regression model of Basu(1997)and the improved Jenkins and Velury(2008)model,and Ball and Shivakumar(2005)accruals and cash flow regression models,the model suitable for this study,the scale of empirical research firm and The influence of the term of office on accounting conservatism.In order to ensure that the conclusions are accurate and reliable,for each measurement model were carried out robustness test.This paper concludes that:(1)the financial statements of listed companies in China are generally sound;(2)The accounting conservatism of the listed company is negatively correlated with the auditing term of the firm.(3)In the larger accounting firms,the relationship between the audit term and the accounting conservatism is weak.According to the empirical research conclusion,this paper puts forward two policy suggestions: first,For small-scale accounting firms should implement the firm forced rotation system,the office term limit of 5years;for large-scale accounting firms can be appropriate to relax the firm’s rotation period.secondly,The supervisory authority should scrutinize the collusion between the firm and the listed company,paying particular attention to the long-term employment of a fixed or one of the two firms to provide audit statements of listed companies,and financial fraud and other acts to increase the punishment,so that they are worth the candle.Third,The supervisory institution shall conduct regular training and assessment of the certified public accountants,strengthen the communication between the signed accountants,and improve the professional competence and independence of the certified public accountants.