Research On The Relationship Between Audit Market Structure And Audit Quality

CPA audit is a kind of supervision mechanism. It play an important role in promoting the financial report towards regular, transparent direction. In the audit market, audit report likes a bridge between the audit service providers and information users, which reflect the accuracy of audit quality.This paper focus on audit market structure, trying to find the relationship between audit quality and market structure. Market structure refers the factors and characteristics between the sellers in market, the buyer in market, also many other like the sellers group and the buyer group in market. This article first discusses the three angles of audit market structure: audit market concentration, firm expertise and access to the introduction of barriers. Then four assumption put forward:(1) In a related context, the higher the market concentration of audit, the better audit quality; (2) Firm expertise and audit quality are positive correlation; (3) the stronger regional audit, the worse audit quality, that is, regional audit and audit quality are negative correlation; (4)Firm change and audit quality does not show an obvious relationship. Second the article chooses non-standard audit opinion ratio as a substitute variable. Third this paper use the 2004-2008 data from Chinese Institute of Certified and public companies as the samples to take for the descriptive statistics and empirical analysis, and draw four conclusions:(1) audit market concentration and audit quality exist an inverted "U"-type (2) market share is correlated with audit quality, but the increasing market share did not improve audit quality (3) the off-site practice is conducive to the improvement of audit quality; (4) firms change and audit quality not show significant correlation. Finally, some policy recommendations.