Accounting Conservatism,Environment Uncertainty,and Auditor Choice

Under the theory of information asymmetry,auditing has become an institutional arrangement to guarantee the fulfillment of fiduciary duties and reduce agency costs.High-quality audits can increase the credibility of financial information and increase the value of financial information.In terms of high-quality audit supply and demand,it is not only necessary to study how to increase the supply of CPAs to high-quality audit services,but also urgently need to study how to promote the demand for high-quality audit services by listed companies.The asymmetry in accounting conservatism in identifying losses and benefits is “good news” for auditors,helping to reduce the audit risk faced by auditors.Under the influence of signal transmission,the improvement of accounting conservatism can effectively alleviate the problem of agency contradiction and information asymmetry.The company with higher accounting conservatism means that its financial report is more credible.If the auditor is faced with environmental uncertainty and how the auditor makes the correct audit decisions and judgments,accounting conservatism becomes an important reference indicator for the auditor,thereby improving audit quality.Therefore,how will accounting conservatism affect auditors' choices in the vast Chinese market? How does environmental uncertainty play its regulatory role? It needs to be verified through empirical research.Based on the above analysis,this paper takes the 2005-2017 Shanghai and Shenzhen A-share market as the research object,selects 8697 listed companies' annual data as a sample,and uses Logistic multiple regression method to analyze the relationship among accounting conservatism,environmental uncertainty and auditor choice.The study found that the higher the level of accounting conservatism,the more enterprises tend to choose high-quality auditors;environmental uncertainty can promote the positive relationship between accounting conservatism and audit choice.The research in this paper shows that accounting conservatism can promote the choice of high-quality auditors by improving the quality of accounting information and reducing litigation risk.The role of accounting conservatism is self-evident.Therefore,China should take the initiative to give capital market pricing and governancefunction,improve the market economic system,consolidate the foundation of enterprise development,and encourage enterprises to actively improve the level of accounting conservatism.