Research On The Effect Of Public Accounting Firms' Scale Expansion Strategy

With the development of market economy, Certified public accountants just like economic policemen play a more and more important role in protecting economic order. Currently, the certified public accountant industry exists many problems such as low audit quality, low economic benefit, excessive competition. Along with China entering into WTO, the market of accounting is further opening. "Big four" international public accounting firms' entrance causes more keen competition. As a result, the mutual recognition has achieved theoretically and practically in the following three aspects: trying to enhance our public accounting firms' market competitive power, improving audit quality, implementing scale expansion strategy. However the existing relevant research is not thorough, the research about the effect of public accounting firms' scale expansion strategy is very scarce. Great changes have taken place in the accounting environment and market background of our country, It is more urgent to carry on this research systematically and deeply.On the basis of reviewing the history of domestic and international public accounting firms' scale expansion, the thesis analyzes the audit market competitive structure using Porter's "five force model" from the theory of strategic management. Thus it proposes currently that it is a necessary choose to Implement scale expansion strategy for public accounting firms. Combining the two deciding factors of audit quality: special ability and audit independence, the thesis demonstrates the close relationship between public accounting firms' scale and audit quality. And it induces the function of the effect of public accounting firms' scale expansion strategy using the function of wealthy utility from the effect of the agency cost. At the same time, by introducing the "fiscal mistake correction" as the index of the audit quality for the first time, it proves the arguments through the regression analysis. To sum up, this thesis demonstrates the effect of public accounting firms' scale expansion strategy in three ways : theoretical analysis , mathematical analysis and empirical...