The Research On Relationship Of Auditor Tenure And Audit Quality

In well-developed security market, the research of the relationship of auditor tenure and audit quality has a long history , especially the question long auditor tenure would destroy audit quality is bone of contention all along. Many researchers conclude that long auditor tenure would destroy audit quality in theory , but in positive studies , the relation of auditor tenure and audit quality is uncertainty , some scholars thought long tenure would improve audit quality ,some researchers didn't think so. The research of auditor tenure and audit quality started relatively late, America adopted rotation of chief CPA in 2002, afterwards the statute of signature CPA's rotation was put into practice in 2003, the relationship of auditor tenure and audit quality has become focus question.This thesis focuses on the concern about the relation of auditor tenure and audit quality. On the basis of summarizing research achievements on auditor tenure and audit quality both at home and abroad, we analyzed the status quo of audit market and weights of audit quality. We choose listed company statements earnings response coefficients(ERCs) to weight audit quality, we selected 7317 samples between 1997 and 2004 to carry through positive research , then classed the 7317 samples according their tenure is or not longer than 4 years and their vocations to put up statistic analyse separately. We conclude: the sum coefficients of cross variables of auditor tenure and earnings and earnings change were all prominent positive in full sample,restricted sample and industrial vocation, the relation of auditor tenure and ERCs was positive, this means, longer auditor tenure , investors thought the quality of statements earnings were higher, auditor quality were higher. At last, according to positive research's outcomes and the status quo of audit market, we brought forward some proposals on the company's framework,audit commission system,CPA vocation,supervision of auditor and so on, in order to enhance auditor's status,improve their independence,improve accounting information quality and protect the interests of investors.