The Research On The Relationship Between The Financial Restatement And Accounting Firm Change

This paper mainly carries on the empirical research on the relationship between financial restatement and accounting firm change.Based on the theory of risk management,reputation theory and signal transmission in accounting firms and the previous researches,first of all,the relationship between the two is studied.According to different perspectives,the financial restatement is divided into multiple financial restatement and single financial restatement,core financial restatement and non-core financial restatement,non-compliance financial restatement and error financial restatement,as well as the degree of financial restatement.Then,the impact of financial restatement on accounting firm change under different circumstances is studied.In addition,I investigate the change in the direction of the firms.According to the ranking of the Chinese Institute of Certified Public Accountants,change in accounting firms are divided into upward change and non-upward change in order to investigate whether the occurrence of financial restatement has caused the firm to increase its ranking.And according to the division of the financial restatement,the relationship between the company's restatement behavior and the ranking of the firm's ranking in each case is studied separately.Finally,this article analyzes the impact of corporate financial restatement on industry expertise from the perspective of accounting firm industry expertise.Therefore,this paper proposes three levels of hypotheses as follows.Firstly,the company with financial restatement is more likely to change the accounting firm compared with the company without financial restatement;And the company with multiple financial restatement,core restatement,non-statutory financial restatement or the higher error level of earnings reporting restatement is more likely to change the accounting firm.Secondly,the company with financial restatement is more likely to change a better accounting firm;And the company with multiple financial restatement,core restatement,non-statutory financial restatement or the higher error level of earnings reporting restatement is morelikely to change a better one.Thirdly,company with financial restatement is more likely to change a higher-performing accounting firm.According to the empirical results of this paper,the assumptions in the paper are demonstrated.The main innovation of this paper are as follows.First of all,researchers studied the financial restatement or accounting firm change separately.And this paper further enrich the direct relationship between the two.Secondly,the financial restatement is divided into different types according to different perspectives and the effect of financial restatement on firm change is studied.Finally,based on the firm rank,this paper further introduces the concept of professional expertise of accounting firm.