The Organizational Form Of Accounting Firms And Audit Negotiation Research

Audit negotiation is one of the most important influencing factors of audit quality and accounting information quality of capital markets, it is also an important issue of mutual interest by inland and foreign auditing academe and profession. Audit negotiation spreads all over the audit process, no matter what confirmation of financial statements,disclosure of the financial statements and the amount of audit fees etc, financial statements should be read as a joint statement from the audit negotiation, the outcomes of audit negotiation influence audit quality, then influence the quality of financial reporting and the resource allocation efficiency of capital market. Therefore, audit negotiation has important influence on the quality of audited financial report and the healthy development of capital markets.However, audit negotiation research has a short history, has not yet formed a comprehensive research framework for it. further more audit negotiation research mainly concentrated in the characteristics of negotiators and negotiation strategy involved in the negotiations on such factors, the research that system factors and environmental factors influence negotiation outcome and negotiation process is rare. Especially in China, audit negotiation research has just started, the research of factors that influence audit negotiation is still relatively scarce, many research questions are still to be discovered, especially in the background of our country's system, there is a big difference with the Western developed countries'system, our country's unique system is a challenge but also a great opportunity to research audit negotiation questions.This paper use game model and negotiation theory in social psychology and other disciplines to analyse the influences that the organization form of accounting firms on the outcome of audit negotiation by auditors and clients and the negotiation strategies, and we also use the method of experimental economics to design a specific laboratory experiments to test the influences that organization form of the accounting firms on audit negotiation. The dissertation is divided into six chapters. The first chapter is an introduction, main content is research motion, research questions, research significance, research framework, research methods and research innovation; the second chapter is literature review, summarized research findings and research methods of the inland and foreign existing literature; the third chapter is theoretical analysis of organizational form of the accounting firms influences on audit negotiation, based on theoretical analysis, we proposed research hypothesis; the fourth chapter is experimental design, introduced the experimental design that organization form of accounting firms affect the negotiation process and negotiation results; the fifth chapter is experimental results and analysis of organization form of accounting firms influences on audit negotiation; the last chapter is the conclusion and future research directions.The main conclusions of this dissertation are as follows:1. Theoretical analysis showed that, the organizational form of accounting firms influence audit negotiation. The organizational form of accounting firms has three forms:limited liability company system, normal partnership system, special normal partnership system, since partners of accounting firms with different organizational form have different legal liability, induced that audit negotiation outcome and partners' negotiation strategies and customers' negotiation strategies have differences. The possibility of the agreement reached by. auditors of different organizational forms accounting firm and clients is different, the agreed outcome of the negotiations is also different. audit negotiation is distributive negotiation divided by the structure of the negotiations, auditors use cooperative strategies more often, customers use competitive strategies more often, competitive level of negotiation strategies used by auditors in different organizational forms accounting firm are significantly different, and further affect the customers' negotiation strategies,2. The experiment results showed that, the organizational form of accounting firms influenced the possibility of the agreement reached by auditors and customers. The possibility of the agreement reached by limited liability company system accounting firms'auditors and customers is higher than the possibility of the agreement reached by normal partnership accounting firms' auditors and customers, the possibility of the agreement reached by normal partnership accounting firms' auditors and customers is the same as the possibility of the agreement reached by special normal partnership accounting firms'auditors and customers3. The experiment results showed that, the organizational form of accounting firms influenced the agreed outcome of the negotiations by auditors and customers. The cautious level of agreed outcome of the negotiations by limited liability company system accounting firms'auditors and customers is the lowest, the cautious level of agreed outcome of the negotiations by normal partnership accounting firms'auditors and customers is the middle, the cautious level of agreed outcome of the negotiations by special normal partnership accounting firms'auditors and customers is the highest.4. The experiment results showed that, the organizational form of accounting firms influenced the negotiation strategy used by auditors. The competitive level of the negotiation strategy used by special normal partnership accounting firms'auditors is higher than the competitive level of the negotiation strategy used by normal partnership accounting firms' auditors, the competitive level of the negotiation strategy used by normal partnership accounting firms'auditors is higher than the competitive level of the negotiation strategy used by limited liability company system accounting firms'auditors.5. The experiment results showed that, the organizational form of accounting firms influenced the negotiation strategy used by customers. The competitive level of the negotiation strategy used by customers negotiated with special normal partnership accounting firms'auditors is lower than the competitive level of the negotiation strategy used by customers negotiated with normal partnership accounting firms' auditors, the competitive level of the negotiation strategy used by customers negotiated with normal partnership accounting firms'auditors is lower than the competitive level of the negotiation strategy used by customers negotiated with limited liability company system accounting firms'auditors.6. The experiment results showed that, agreed outcome negotiated by auditors of different organizational form's accounting firms and clients is affected differently by the audit tenure. The audit tenure is longer, the lower is the cautious level of the agreed outcome negotiated by limited liability company system accounting firms' auditors and clients, but the cautious level of the agreed outcome negotiated by normal partnership accounting firms'auditors and clients and the cautious level of the agreed outcome negotiated by special normal partnership accounting firms'auditors and clients are not affected by audit tenure.