Research On The Influence Of Grant Thornton's Merger On Audit Behavior

With the acceleration of internationalization and more fiercer competition,the merger of CPA firms usually happened.In 2009,the Ministry of Finance and China Securities Regulatory Commission promulgated new policy to clarify the accreditation regarding to which kind of CPA firms can engage with entities listed on the H Share market for auditing(includes annual income is not less than 300 million,etc.).After that,so many medium-sized CPA firms have no choice but to merge with each other to meet that requirement.The regulator hope to accelerate integration speed as higher accreditation,and lead to scale of production for domestics CPA firms.Although this kind of mandatory policy made some medium-sized CPA firms quickened their pace for merger,there is doubt for the impact on audit fee and audit quality while the Government created “Passive Merger” by configuring higher line and administrative power.No one know whether the CPA firm can improve their brand value,the internal management,HR structure,ability to fight risk and to become bigger and stronger.It is obvious that research for questions above is necessary.With the merger between Tianjiang Zhengxin CPA firm and Jingdu Tianhua CPA firm on 5 January 2012,the new CPA firm was decided to be named as “Grant Thornton” in May 2012,and it start to be used from 18 June 2012.This essay analyzed the case of Grant Thornton merger and provided guidance based on the combination of the learnings regarding to how merger to affect audit fee as well as audit quality,and the background,reasons and issues of CPA firm merger in China.Firstly,the essay retrospected theories and Chinese situation of CPA firm merger.Then,the essay clarified background and reasons of merger between Tianjian Zhengxin and Jingdu Tianhua.Secondly,the essay analyzed the impact of Grant Thornton merger at firm level and customer churn level,includes difference analysis of audit behavior,change of audit behavior compared with the before and after of merger.The conclusion of research includes:(1)The merger of Grant Thornton did not lead to higher audit quality at firm level,but result to higher audit fee,which was not due to higher quality;(2)For customers those retained in the firm for 4 years,the merger of Grant Thornton has no impact on audit fee and quality.The enlightenment of the research concluded that both sides should Establish a correct concept,choose right counterpart,integrate superior resources and coordinate cultural difference.Finally,the essay pointed out the limitation of the essay and future outlook.