An Empirical Study On The Audit Quality And Executive Officer's Affiliations With CPA Firms

As one of the criterion for justify accounting information quality, audit quality is always among the core field of accounting empirical research. Since the exposure of corporate scandals such as Enron and WorldCom and the enforcement of The Sarbanes-Oxley Act in the end of 2001, audit research scholars put focus on new topic: if affiliated executives who previously worked for the company's audit firms will induce company's audit results?Based on the reason mentioned above, this paper discusses motivation and effect of affiliated employment and provides suggestions for supervision of audit to consummate audit market.There are three parts in this paper. Corresponding contents and conclusions are as follows:The first part summarizes the relevant theory about audit research in chapter 3. These theories include the principal-agent theory, insurance theory, gaming theory and theories about the audit opinions. Meanwhile, this chapter analyses producing reason, principal-agent process of audit and researches on reason, market reaction for different kinds of audit opinions.The second part is core content of this paper which includes chapter 4, chapter 5 and chapter 6. Chapter 4 introduces reactions of the listed companies to the"not clear"audit opinions and the effects of executive offices'affiliations with audit firms on audit quality. In Chapter 5 and 6, we not only study on the affiliated executive in china'audit market by estimating an audit opinion model, but also research the motivations and the results of china's listed companies employed executive who previously worked for their companies'audit firms by Logistic regression method. Empirical results show: the listed companies make decision for employing executive who worked for their companies'audit firms because the listed companies can predict the affiliations would improve audit opinion. As same as the research result abroad, we also find that"clear"audit opinions are issued more for companies which have affiliated executives.The third part of paper put forward a series of policies and suggestions according to the conclusions above. These policy proposals include two sides, one is for supervision of audit, the other is trying to making some suggestion for how to consummate audit market.