Audit Tenure,Firm Industry Expertise And Stock Price Synchronization

Stock price synchronicity refers to the phenomenon of �same rise and fall� in the stock market.The higher the stock price synchronization,the greater the fluctuation of the company's stock price is affected by the macro or micro market and the information of the company's industry.The lower the company's traits content in the stock price,the more worse the effectiveness of market operation;in turn,the lower the stock price synchronization,the greater the fluctuation of the company's stock price is affected by the macro or micro market and the information of the company's industry.The more fully reflected the company's trait content at the stock price,the better the effectiveness of market operations.In the early 1990 s,the rise of China's capital market experienced a transformation from nothing to low,from low to high,from simple to complex.With the improvement of China's economic system,the investment structure,financing structure and the structure of listed companies have been optimized in the operation of the asset market,which are attracting more market participants and making significant contributions to the rapid development of China's economy.The mature foreign capital market has a good function and stability.However,China's stock market is still in its infancy.Naturally,there are many problems in the process of function and stability.Anomalies such as �Thousands of daily limit� and �thousands of stocks limit� are not uncommon.Faced with this reality,both academics and the financial community have turned their attention to the issue of stock price synchronicity in the capital market.In the existing research,the stock price of China's capital market is highly synchronized,and the stock price can not reflect the trait information of the company level,which seriously damages the capital allocation ability of the capital market,and this view is the most common.Therefore,it is of great significance to study the synchronicity of stock prices in China's capital markets.According to the efficient market hypothesis,not having complete competition is a distinctive feature of the immature capital market.China's capital market is an immature capital market and belongs to a weak and effective capital market.The financial report disclosed by the company cannot fully reflect the actual situation of the company.The company's stock price can not fully absorb the company's trait information.In addition,due to the widespread existence of information asymmetry,management participates in the daily operation of the company,and will obtain more company information in the course of business.At this time,the interests of external investors who do not have information advantages will suffer due to information asymmetry exist.On the one hand,when the company's management conceals or delays information disclosure,providing low-quality financial reports,and on the other hand,because the capital market itself will also have noise and other factors,it will increase transaction costs.The combined effect of the above factors may trigger transactions of the problem of adverse selection in the middle.The phenomenon of information asymmetry is more obvious in listed companies.The management of the company will have a great negative impact on the performance of listed companies because of their individual goals,which will further hinder the effectiveness of the operation of the capital marke and will eventually increase the synchronicity of stock prices.Therefore,further analysis of the causes of high stock price synchronization and the search for governance methods have a significant impact on the sustainable development of capital markets,reducing market risks and further rationalizing the allocation of market resources.The audit term that affects the quality of financial reporting is a generally accepted view.However,with the continuous extension of the accounting firm's tenure,the audited company may establish closer ties with the accounting firm,resulting in the firm's auditing can not uphold the principle of third-party independent auditing.In addition,if the firm has a long-term business relationship with the audited company,it may not easily change the audit method that it has used before,and will not change its own with the actual situation of the audited company.Auditing behavior will gradually form an overconfidence mentality,and show poor prudence in auditing behavior,and ultimately fail to provide higher quality auditing services.This situation will worsen the consequences of information asymmetry and eventually lead to a higher level of stock price synchronicity.When an enterprise hires a firm to conduct an annual audit,even if it understands that hiring an accounting firm with industry expertise to conduct audits will increase costs,the company will still choose to hire an accounting firm with industry expertise to conduct audits,so that the audited company can enjoy higher Quality audit services,while getting higher quality audit reports.This behavior of the company plays an important role in alleviating the problem of information asymmetry.It can better help external investors to understand the actual situation of the company,improve the operational efficiency of the capital market,and employ audits with industry expertise to reduce investment.Collecting the marginal cost of company-specific information and reducing the synchronicity of stock prices.This article consists of six parts: The first part is composed of introductions,including the research background and the meaning of the topic,research ideas and research methods,research content and the framework of the paper,as well as the innovation and deficiencies of this paper.The second part is composed of literature review.It summarizes domestic and foreign related research related to the audit term,domestic and foreign research related to the firm's industry expertise,and domestic and foreign related research related to stock price synchronicity;the third part consists of two parts: theoretical overview and theoretical basis.The basic theory related to the audit term,the firm's industry expertise and stock price synchronization;the fourth part consists of theoretical analysis and research hypothesis.Based on the previous theoretical analysis,the two hypotheses are proposed.The fifth part is research design.It is composed of empirical results analysis;this component uses the constructed multiple linear regression model to empirically test the hypothesis and analyzes the results;the sixth part consists of research conclusions,policy recommendations and future research prospects.Empirical test results and recommendations Future Prospects.