Exploring The Association Between Auditor Geographical Distance And Audit Quality

Since 2008,the continuous development of China's capital market has led to an increase in the number of listed companies,from 1,604 in 2008 to 3,485 at the end of 2017.At the same time,the continuous improvement of the securities market has led to an increase in the number of investors.In 2008,it was increased from 53.21 million to 13.39 million in 2017.As an intermediary between investors and enterprises,the quality of auditing helps auditors make more reasonable investment decisions.The improvement of audit quality has inhibited the possibility of the management of the audited listed company to manipulate profits,and played a positive role in the increase of investment confidence of capital market investors.The existing research indicates that the influencing factors of audit quality can be divided into three aspects:audit subject,audit object and auditing environment according to the three-party relationship existing in the audit.The influence of the organizational form of the accounting firm,the length of the accounting firm's auditing period of the audited client,and the organizational size of the accounting firm as the impact on the auditing entity's accounting firm has an impact on the audit quality;The advantages and disadvantages,the level of independence of the board of directors of the listed company affects the deep audit object listed company,and has an impact on the audit quality;the factors that receive more attention in the impact of the auditing environment include audit market structure,audit market demand,audit system and Guidelines,etc.,have shown that the above factors will have a significant impact on audit quality.Relevant research on the theory of new economic geography reveals that geographical features are important factors influencing the behavior of economic subjects and their outcomes.However,few studies in China focus on the impact of geographic characteristics on audit quality.The closer the auditor is,the better the auditor's information collection and processing,the better the development of the audit plan,the audit work,the reduction of interaction costs,the increase of information communication effectiveness,and the reduction of information asymmetry between the auditor and the company.Improve the quality of audits.The 2008-2017 A-share listed companies were selected as the sample of this paper to study the impact of auditors' geographical distance and audit quality.The research finds that:(1)The geographical distance of the auditor is significantly positively correlated with the maneuverability surplus of the listed company,that is,the farther the geographical distance of the auditor is,the greater the accrual profit of the financial statements of the listed company,and the worse the audit quality.(2)If the sample is divided into two groups,whether the auditor and the listed company's city are open to the high-speed rail,it is found that the impact of the auditor's geographical distance on the audit quality is not significant in the high-speed rail audit group,and the high-speed rail audit group is not significant,that is,high.The special opening weakens the negative effect of the auditor's geographical distance on audit quality.(3)If the sample is divided into two groups of auditing institutions as the four major international accounting firms,it is found that the impact of the auditor's geographical distance on the audit quality is significant in the non-international four major auditing groups,while in the international four major firms.The audit team is not significant,that is,the auditor's characteristics significantly affect the auditor's geographical distance's inhibition of audit quality.The main innovations of this paper are as follows:(1)Enrich the literature on economic and geographic perspectives in accounting and financial issues,supplement the relevant research literature on the relationship between auditor characteristics and audit quality,and supplement the research on Choi(2012).Chinese market data is supported by evidence.(2)In the research field that affects audit quality factors,the research literature on the relationship between auditors and listed companies' geographical distance is further expanded.(3)Provide inspiration for market regulators and accounting firms.Due to the degree of information asymmetry and the increase in supervision costs,the audit quality of listed companies with remote geographical distance between auditors and listed companies is relatively low.