A Study On The Impact Of The Accounting Firm's Change And The Abnormal Audit Fees For The Audit Opinion Shopping

The audit opinion issued by the accounting firm is an important basis for the stakeholders understanding the financial status of the enterprise.It reflects the implementation of the fiduciary duty of the enterprise management,and it has a direct impact on the investment behavior of the public investors,the financial investment ability and the stock price of the company.There is a principal-agent relationship between "business operator and accounting firm" in the incomplete capital market,that is,the option right of accounting firm and the decision power on audit fees are held by the business operator.In China,most enterprises adopt the operator incentive mechanism that the rewards are linked to profits.Therefore,when the enterprise has small profits or even a loss,business operators will take a risk to issue a fraudulent financial report.In order to avoid the CPA to keep the audit independence and issue non-standard audit opinion for a false financial report,the audit opinion shopping is frequently occurred in the audit market.Audit opinion shopping reduces the quality of the audit,leads to audit failure,damages to the public interest and affects the stability and development of the audit market.Therefore,the audit opinion shopping has gradually become the focus of practical and theoretical circles.Early research on the audit opinion shopping is mostly focused on the change of the accounting firms,that is,mainly discussing whether the listed companies can achieve the audit opinion shopping by changing the accounting firm.However,with the regulators for the listed companies dismissing and reappointing the accounting firms having further strict information disclosure requirements,and taking into account on the high start-up costs when employing new accounting firms,the listed companies begin to take other more covert and lower cost way to purchase audit opinion,that is,pay abnormal audit fees for the accounting firm.Therefore,the audit opinion shopping behavior not only focuses on the change of the accounting firms,but also abnormal audit fees for he accounting firm.At the same time,this paper also explores whether there is an interaction between the accounting firm's change and the abnormal audit cost,that is,whether the listed companies that not only change the accounting firm but also pay the abnormal audit fees can successfully realize the audit opinion shopping.Therefore,this paper analyzes the audit opinion shopping behavior of listed companies from three perspectives: the change of the accounting firm,the abnormal audit fees and the interaction between the accounting firm's change and the abnormal audit fees.This paper selects 3789 non-ST listed companies for the period of 2013-2015 in Shanghai and Shenzhen stock markets as research samples.Combined with the status of audit market in China,this paper firstly establishes a linear regression model of audit fees and asset size to determine the normal audit fees.And based on the audit conspired exposure company's audit fees,which exceeded the average level of normal audit fees is determined as the normal audit fees floating ceiling,and the audit fees exceeding the upper limit is determined as an abnormal audit fees variable.This article uses the approach of "tendency value" to make a comparative analysis on the listed companies whether change the accounting firms,whether pay the abnormal audit fees to the accounting firms,and whether change the accounting firms and pay the abnormal audit fees at the same time,and achieves the control of the listed companies that the listed companies don't change the accounting firms,don't pay the abnormal audit fees,and don't both change the accounting firms and pay the abnormal audit fees at the same time.Lastly,The binary logistic regression model of the audit opinion type with the change of the accounting firm,the abnormal audit fees and the interaction of the two is established respectively to determine whether the listed companies achieve successfully audit opinion shopping.The empirical results show that the listed companies can successfully realize the audit opinion shopping through the change of the accounting firm,the abnormal audit fees and the interaction between the accounting firm change and the abnormal audit fees.Finally,according to the theoretical analysis and empirical research results,this paper puts forward the policy recommendations on the audit opinion shopping behavior from three perspectives: market supervision,the supplier side of the audit opinion and the demand side of the audit opinion,hoping to regulate the audit behavior,and promote audit market reliable and effective development.