Firm Reputation,Institutional Environ-Ment And Audit Contract Stability

Since the Ministry of Finance issued the "Opinions on Promoting Accounting Firms to Be Bigger and Stronger",in view of the objective needs and competition needs,combined with the current supply-side reform policy,local accounting firms should be updated to be bigger and stronger.And further refinement and implementation,through the multi-dimensional research to provide local accounting firms with development and upgrading assistance.At present,the goal of cultivating about 10 companies that can serve Chinese listed companies to achieve the"going out" strategy has been initially realized.It has also cultivated large-scale local accounting firms such as Lixin and Ruihua,but it provides comprehensive services for transnational operations.The goal remains to be continued.In other words,although local accounting firms have gradually acquired a certain right to speak in China's audit market,there may still be some gaps with international standards,and after expanding the size of the firm through mergers,it should also consider whether it should be established.It is a reputation system of local firms,so that it can better convey the audit signal to investors through the reputation effect,and gain the trust and recognition of the investment market.From the perspective of listed companies,the cancellation of the audit contract belongs to the auditor's choice behavior of listed companies,which is a normal phenomenon in the audit market.However,for accounting firms,in general,auditing behavior is different from other market selection behaviors,and it has certain continuity and stability,so as to ensure that accounting firms can continuously improve their self-governance level in a stable business environment.,gradually achieve the goal of becoming stronger.At present,most of the research on the relationship between firm reputation and audit contract is based on the conclusions of the European and American capital markets,but there are big differences between China's capital market and the institutional environment of European and American capital markets.Therefore,this paper attempts to study the correlation between firm reputation and audit contract,and introduces the institutional environment as a regulatory variable to further explore the impact of institutional environment under different degrees of development on the relationship between firm reputation and audit contract,as well as institutional environment and affairs.Whether reputation exists as a complement or substitute for formal and informal institutions.According to the convenience of relevant research and data acquisition at home and abroad,this paper regards the " Big Four" as the representative of the reputation of the firm,and measures the institutional environment by the average of some indicators of the marketization index of China's provincial provinces compiled by Wang Xiaolu.The stability of the audit contract is measured by whether the listed company has changed in the same year,and on this basis,the manual change is used to eliminate the change of the audit contract due to the restructuring or merger of the firm.On the basis of the existing literature review and theoretical analysis,the appropriate model is used to empirically test the relationship between the three,and the following research conclusions are obtained:First,a good firm reputation can significantly affect the stability of the audit contract.The role of protection.Second,a sound institutional environment can significantly restrict the stability of the audit contract.Third,the reputation of the firm and the institutional environment complement each other,and the stability of the audit contract is enhanced.Finally,this paper puts forward suggestions from the perspectives of strengthening the governance level of the firm,strengthening the practice environment of the audit industry and improving the degree of investor protection.