An Empirical Research On The Relationship Of Audit Environment Improvements, Customer Importance And Audit Quality

This article's mainly study is that the new issued accounting and auditing standards in 2007 how to influence the relationship between the customer importance and audit quality. In this article we choose the year of 2007 as a watershed, with earnings management as alternative variable of audit quality, empirical research the relationship between the customer importance and audit quality before and after 2007, and the new accounting and auditing standards how to influence the relationship of them.From the personal auditor level we found that the customer importance and earnings management are positively related from 2004 to 2006, namely, the more importance customer importance to the personal auditors leads more earnings management and lower audit quality. Conversely, the lower customer importance leads smaller earnings management and higher audit quality. However, from 2007 to 2009, after implemented the new relevant rules, the customer importance level and earnings management are negative related. That is to say, higher customer's importance level leads lower earnings management and higher audit quality; and vice versa. Yet between 2004-2006 and 2007-2009, without contorting the customer importance of personal auditor level, based on office level, customers importance is negative related with earnings management and is positively related with audit quality. There is scarcely change except for significant level has some difference in two stages.In short, based on the specific situation in our country at present, we take the stock market experience for reference data and choose all A-share listed companies as a sample from 2004 to 2009 in China. We mainly research the audit environment improvement how to influence the relationship of the customer importance and audit quality. By research in this article, we hope we can provide some measures to promote the improvement of the quality of the audit in our country. Specifically, this article respectively from the firm level and personal auditor level to research, taking comparison analysis in two different stages, we empirical analyst the customer importance level how to influence the auditing quality. The conclusions of our study are as following:(1) From the model general empirical conclusions, we found that personal auditor more easily take compromise to the customer who has an important role in the economy, thereby reducing audit quality. Through the contrastive analysis of the CIA and CI0, we can infer that the personal auditor is more sensitivity on audit environment change.(2) Through the comparative analysis of two stage model, we found the audit quality will improve with improvement in the audit environment. No doubt in China, more improvements in external audit environment will improve the auditing quality and decrease possibility of audit failure or audit compromise.