Study On The Audit Pricing Effect Of Financial Fraud

With the rapid development of economy,capital market plays a more and more important role in our national economy.Whether capital market could allocate resources in a normal way,i.e.supplying blood to the real economy,is important to the prosperity and stability of our economy,and has a very significant meaning of structuring harmonious society.Capital market can't operate without reliable financial information.Due to the wide existence of information asymmetry,as well as various demands of listed companies,financial fraud occurs often,seriously affecting the normal activities in capital markets.More seriously,it hurt the confidence of investors.Therefore,financial fraud has been one of the hotpots,which appeals the wide attention of both theorists and practitioners.In this paper,the author start her research from the external governance mechanism of listed companies——CPAs' auditing.Specifically,the author chooses audit pricing,which is one of the economic aspects connecting listed companies and CPAs in order to study the influence of financial fraud on the CPAs' audit pricing.At the same time,audit pricing is one of the most important risk response strategies of CPAs.The author uses the data of 2003-2012 from regulators ' punishment announcements of listed companies which making financial fraud.On the basis of fraud motivation theory,auditing demand theory,risk-based theory and audit pricing model the author builds the framework of how financial fraud influencing audit pricing.From the empirical research,the author has drew the main conclusions as follows:Compared to normal listed companies,audit pricing is higher for listed companies which making financial fraud;CPAs improve the audit pricing after listed companies were punished by regulatory agencies;At the same time,the study also found that,the level of regulatory agencies can't significant effect audit pricing in the Chinese current regulatory system;the degree of punishments have weakly positive effect on audit pricing.According to the results of empirical research,the author propounds the proposals from the view of CPAs?regulatory agencies?policies and regulations.In the author's opinion,maintaining the independence of CPAs,improving their professional ability,carrying out risk-based auditing,strengthening regulatory agencies' supervision and involvement,inputting more related resources,improving the construction of laws and regulations could reduce financial fraud's occurring and maintain the normal order of capital market.