Study On Audit Failure Of Chinese Security Market

In the evolution of Chinese security market, the fraudulent accounting and the audit failure have always been concern. From ShenzheYuanYe, YinGuangXia, to DaErMan, KeLong, the series accidents, to the CPA, has been focused by the public. Not only to the fraudulent case itself, but the more important, to the auditing system of Chinese security market, is it worth of being trusted that the information disclosure systems have been formed and resulted from accounting information disclosure system of western countries. The auditing theoretical counterparts have been discussing on the problem of audit failure. Some scholars are concentrated on attacking the governance structure of listed companies and their external supervision system and think it is the basic reason. Another view attributes it to the fault of vocation system and external practice environment. Other views are concentrated on the fields of the Auditing Internal process, common technic or law system. These views offered significative instructions to the research of audit failure. But we found they didn't reveal the ultimate reason of Audit failure. So this article attempts to discuss the problem with the tool of modern Institutional economics, the theory of path dependence.The development of Chinese security market and independent auditing, the article argues, no doubt , as a kind of system evolution, have the characters of path dependence. On one hand, the initial design and choice are important, where China established the auditing system rapidly by following the changing way of western CPA system. But there are some non-efficient ingredients in the western CPA system itself, including lack of independence, vocational moral and professional cautiousness, and competition , etc, which make up the common reasons of Chinese and foreign audit failure. This is why we attribute it to the common reasons of auditing failure of Chinese security market. On the other hand, on the background of state opportunism,...