The Empirical Research On Opinion-shopping

A-shares in China usually switch auditors, this has long been a unique phenomenon of China's security market. In recent years , regulators and researchers responded to concerns that companies use auditor switching to avoid receiving unfavorable audit reports.Despite these concerns , it is still unclear whether companies can successfully engage in opinion-shopping. So our research in this field will be very significative.Because previous studies show that post-switch opinions are not more favorable than pre-switch opinions, some researches concluded that opinion shopping is futile. However, this conclusion is flawed because pre-switch opinions are poor proxies for the unobserved reports companies would have received had they made opposite switch decisions. Hence, we want to improve the traditional methodology.Using dates of Chinese A-shares of both Shenzhen Security Exchange and Shanghai Security Exchange in 2004 as our sample, we use an audit report model to predict the unobserved reports and we test their effect on auditor switching through two switching models. Although observed post-switch reports are not more favorable than pre-switch reports, the reports companies would have received under opposite switch decisions are predicted to be significantly worse. Therefore we conclude that A-shares in China did have the motive of opinion-shopping and did successfully engage in opinion-shopping in 2004 The conclusion has a close connection with the fact that the measures to supervise auditor switching is not effective and the auditing market is far from mature.Hence, in order to prevent the occurrence of opinion-shopping, we should enhance and consummate the information disclosure system that governs the auditor switching, and cultivate the audit market.The conclusions in the thesis are beneficial to supervising the security market and researching the topics of opinion-shopping in China.The dissertation is divided into five chapters.Chapter 1 introduces the research topic, significance and outline. Chapter 2 introduces the background of the research. Chapter 3 reviews the foreign and domestic literatures on auditing report opinion,and auditing collusion. Chapter 4 discusses models, methodology, date processing, sample selecting, and providing the empirical result. Chapter 5 provides conclusion,suggestions and defects.