Research On Auditor Pricing

As one of the most important external supervision methods,third-party independent auditing is related to the health and stability of China’s capital market.However,due to the late development of China’s audit market,a unified pricing standard for auditors has not yet been formed,and there is no rules to follow when negotiating prices between the two parties.In addition,the high market share of the "Big Four" in the international market has triggered fierce competition among local institutions.The low cost of audit fees and the existence of vicious competition have seriously constrained the healthy development of China’s audit market.In view of this,exploring the issue of auditor pricing can provide reference for the further standardization of China’s audit market,so as to better play the role of accounting firms as gatekeepers and maintain the order of the capital market.On the basis of reviewing relevant literature,according to market competition theory,principal-agent theory,information asymmetry theory,social exchange theory and risk oriented audit theory,drawing on the basic framework of audit fees proposed by Simunic,this thesis analyzes the main factors affecting auditor pricing from three dimensions of audit cost,audit risk and expected profits of the firm,and constructs an auditor pricing index system.Then,taking the A-share listed companies in Shenzhen Stock Exchange in 2021 as the research sample,the thesis uses curve fitting method to analyze the non-linear functional relationship between various variables and audit fees,and uses multiple non-linear regression method to build an auditor pricing model.The test results of the test samples showed that under the condition of error rate not exceeding 15%,the accuracy of the model reached 94.41%,indicating good predictive ability.The research shows that there is a logarithmic relationship between the number of subsidiaries,the level of internal control and audit fees,and there is an open up quadratic function relationship between the capital structure,solvency and audit fees,and the level of internal control has the most significant impact on auditor pricing.Finally,based on the research findings,the thesis provides policy recommendations for the pricing of auditors and the development of the audit market in China.The thesis has made certain innovations and breakthroughs in the analysis of the main influencing factors and modeling methods of auditor pricing,enriching the research related to auditor pricing,providing guidance and reference for the negotiation between audit parties,and also providing reference for the formulation and improvement of policies related to auditor pricing in China.