Auditor Reputation And Stock Price "Contagion" Effect

Since the "collapse" of Arthur Andersen,one of the "big five" firms,auditor reputation has attracted extensive attention from investors and academia.Some studies have explored the impact of auditor reputation on audit quality and corporate governance,and there is still a lot of research space for the operation of auditor reputation mechanism in the secondary securities market.The reality shows that when negative events occur in the market,investors will re-examine the companies associated with negative events with a negative attitude,which will be reflected in the volatility of stock prices in the capital market and produce stock price contagion effect.Therefore,from the perspective of social network,it is of great theoretical and practical significance to study the stock price contagion effect of auditor reputation.Based on this,from the perspective of reputation damage,this paper selects penalty notices issued by China Securities Regulatory Commission to accounting firms from 2017 to 2020 to investigate the market reaction of other listed companies audited by the same accounting firm,that is,to study whether auditor reputation damage will produce stock price contagion effect.The influence of contagion effect is further explored from the Angle of information disclosure quality and reputation of accounting firm.The results show that :(1)auditor reputation has stock price contagion effect.Accounting firms issued by the CSRC penalty announcement will lead to stock price contagion effect of related companies.This shows that the SFC s announcement of punishment will affect not only the stock price of the company concerned but also related companies.(2)The negative contagion effect caused by the punishment announcement issued by CSRC is more significant in the listed companies with lower information disclosure quality.The quality of information disclosure is low,and the higher the degree of information asymmetry between investors and listed companies,the easier it is to mislead investors and make them make wrong investment decisions.(3)After studying the property rights of affiliated companies,we find that the moderating effect of information disclosure quality on auditor reputation stock price contagion is more significant in non-state-owned enterprises.(4)From the perspective of accounting firms,the research shows that accounting firms with high reputation will cause a greater degree of stock price contagion effect.The higher the reputation,the higher the attention,the higher the attention will have the "amplification" effect on the crisis events,thus intensifying the market reaction.The research contributions of this paper are as follows :(1)we enrich and expand the theoretical system of auditor reputation and contagion effect by studying the impact of auditor reputation damage on stock prices of other companies audited by the same accounting firm;(2)The influence of the contagion effect on auditor reputation is analyzed from the perspective of information disclosure quality,which provides a new perspective for the study of the factors influencing the contagion effect;(3)Starting from the issuance of penalty announcement by CSRC,it confirms the regulatory role of CSRC,which has an incentive effect on the improvement of audit quality and is conducive to the healthy development of the audit market.