A Study On Economic Consequences Of Accounting Firm Mergers

In order to promote the development of China's socialist market economy and meet the strategic needs of Chinese enterprises to go global,the Chinese Institute of Certified Public Accountants issued the "Advice on Making Accounting Firms Bigger and Stronger" in May 2007.This policy is proposed to accelerate the development of China's CPA industry,to enhance the strength and competitiveness of local firms,and thus to make local firms bigger and stronger.In June 2012,CICPA released a number of policies and measures to support the accounting firm to further strengthen and expand,further promoting the wave of mergers.Ruihua Certified Public Accountants is very typical of the local firms through the merger growing up in China and has a high reference signification for other firms.Therefore,this paper chooses Ruihua Certified Public Accountants as the case study object,and comprehensively analyzes the effect of Ruihua Certified Public Accountants merger from the angle of income,customer and audit quality.By comparing the economic consequences of the two mergers,this paper analyzes the differences and finds out the reasons,from these analyses,this paper provides some inspiration and suggestion for the merger of local firms.To some degree,the first merger of Ruihua promoted its "bigger" strategy to achieve;the second merger improved the customer's structure,improved the audit fees,but the effect of the second merger is not significantly,it did not promote the "stronger" strategy to achieve.The different economic consequences of the two mergers maybe due to the two mergers occurred at different stages,differences of economic development,differences of the firm's internal development needs and differences of consolidation effort.Therefore,it is advisable to merger when the state of economy is good and the market of audit is expanding.When the audit market has been shrinking,accounting firms have to choose deep farming audit market,and constantly improve and maintain their own audit quality and service level.At the same time,the merger should pay attention to the substantive integration of both sides.Only in this way,can they retain a place in the fierce audit market.