Analysis Of IPO Auditing Quality Based On Game Theory

With the reform and development of China’s capital market,sometimes auditing fails to play its function of verification.Financial fraud cases emerged in an endless flow.Companies often have their performance "altered" after listing,causing huge losses to investors.It is bad for the development of the capital market.Since the 18th national congress of the communist party of China(CPC),government departments,regulators and investors have put forward higher requirements on the quality of certified public accountants’practice,expecting the audit reports issued by certified public accountants to have higher information content and decision-making relevance,improve the auditing quality,and reduce the risks brought by the uncertainty and information asymmetry in the capital market.The complexity of IPO auditing quality arises from the comparison of power games in the auditing process.This paper is combined with the connotation,characteristic and influence factors of IPO auditing.It analyzes IPO auditing quality based on the perspective of game theory.It assumes expected utility of different parties and related parameters setting.It builds a game model and analysis in three participants(company,certified public accountants and regulators)drawing lessons from "supervision game model".Under the background of the incident between Shinewing Certified Public Accountants and DENG YUN CO.,the paper discusses the behavioral strategy and IPO auditing quality of DENG YUN CO.,Shinewing Certified Public Accountants and CSRC at different nodes,especially the impact of the change in macro environment on the behavior strategy and IPO auditing quality.The research significance of this article is that it improves the quality of IPO auditing from the perspective of game theory and finds effective measures through the change of the parameters.The influence firm with high probability of IPO audit quality is the probability of government regulators detailed investigation from the perspective of government departments.It is also the probability of false information from the perspective of enterprise.According to the model and related parameters,this paper puts forward some countermeasures.It hopes that the government can lead the enterprise and the public accounting firm to the ideal state of equilibrium by the top-level designing.The goal of this paper is to improve the quality of IPO auditing and the efficiency of capital market.