A Study On The Reasons And Economic Consequences Of Listed Companies Changing To Newly Registered Accounting Firms

The new Securities Law,implemented on March 1,2020,stipulates that accounting firms engaged in securities service business shall "report to the securities regulatory authority of the State Council and relevant competent departments of the State Council for filing"(referred to as the "filing system").The filing system does not establish a prerequisite for accounting firms to engage in the securities service industry,so this measure greatly reduces the entry threshold for them to engage in auditing business.From August 2020 to May 2022,the number of accounting firms engaged in securities service business rapidly increased from 40 to 94,and 54 accounting firms that did not previously have securities service qualifications successfully registered and entered the securities market.In the short term,with so many accounting firms increasing,investors and market regulatory agencies may have doubts about the new filing firms and their audit quality,and raise the following questions: What are the characteristics of listed companies that change the new filing firms? What are the possible reasons for listed companies choosing new registered accounting firms? What are the economic consequences of choosing a new registered accounting firm? These are all practical issues that have received much attention under the filing system.This article conducts research on the behavior of delisted listed companies changing their new registered accounting firms in the past two years,analyzes the common characteristics of such companies,and further analyzes the deep motivation behind the case company ST Huaxun’s change of new registered accounting firms.As the main case of this study,ST Huaxun was unable to express its opinion last year and faced the risk of delisting.Behind this change,there is a strong motivation to purchase audit opinions and reduce audit fees.After the change,it also brought many adverse effects,and ST Huaxun was warned by external regulatory agencies,causing negative market reactions.In the end,it was unable to purchase audit opinions and was forced to delist.This case study confirms that the external regulatory mechanism under the new Securities Law has a positive impact on the change behavior of accounting firms,which is conducive to improving the audit quality of listed companies.This paper argues that listed companies on the verge of delisting may use the change of newly registered accounting firms to avoid delisting,and there is a high Audit risk.Therefore,for newly registered accounting firms,when undertaking business,they should maintain independence and resolutely avoid being bought by customers such as listed companies that are on the verge of delisting,so as to reduce Audit risk and help the development of the capital market;For regulatory authorities such as exchanges,efforts should be increased to regulate relevant listed companies and newly registered accounting firms.