The Effects Of The Accounting Firms Transforming Into Limited Liability Partnership On Audit Quality

On July 21,2010,Ministry of Finance and the StateAdministration for Industryjointlypromulgated the tentative measures for adopting the organization of limited liability partnership,in order to promote the development of accounting firms.In this study,we examine the effects of the accounting firms transforming into limited liability partnership on audit quality.First of all,the paper introduces the research background,aims and significance.Through reviewing the relevant literature,we comb the basic theory of audit quality,including the concepts,evaluation standards,factors andindicators of audit quality;In addition,we expound the characteristics of the different organizational forms of accounting firms,comparing the differences between limited liability partnerships and the others.Through analyzing the change of the audit industry from 2010 to 2016,we come to know the situation of audit industry in recent years in the overall level.The empirical study selects the data from listed companies during 2010 to 2016.we find that,the transformation to limited liability partnership has a significant positive effecton the audit quality.This effect is becoming apparent in the next two or three years after the transformation.Moreover,in contrast to the audit client that is in the main board market,the effect is more significant if the audit client is in the Sme market.And there is no evidence that listed company ownership influence the relationship between the transformation and audit quality.This paper provides new empirical evidence and the conclusions enrich the literature on accounting organization forms.We attempt to offer the proposal to the certified public accountants,the accounting firms and the regulators.