A Study Of The Influence To The Audit Quality Exerted By Audit Firm Scale In Audit Firms

It’s a focus of theorists and practices while audit firms improve audit quality.Because,a number of financial frauds over the world tells us that in order to protect investor’sprofit and stability&development of securities market, it needs a series of externalmechanism to raise quality of information disclosure of listed companies. The audit firms arethe external supervision of one of the important mechanism.Many domestic and international studies show that the establish of audit firms iseffective for improving the audit quality, but how audit firms help to improve audit quality ishardly involved, so it is important to research the relationship between audit firms and auditquality.In this paper, a sample of1671A shares List Companies in Shenzhen and ShanghaiStock Exchange have been collected to find the relationship between audit firms and auditquality, based on Audit theory and Principal-agent Theory. The findings of the paper asfallows.(1)Model1exhibits that domestic” top ten” do not respectively correlation with theaudit quality, and above the level of significance; otherwise,”top four” respectively positivecorrelation with the audit quality.(2) Model2exhibits that” top ten” respectively positive correlation with the auditquality, but above the level of significance.(3)Model3exhibits that big10*index respectively positive correlation with the auditquality, and below the level of significance.The study has the following meanings:(1) Adding the market index in the model3to research on the relationship between auditfirms and quality of audit firms;(2)To some extent, the research findings can be used for Provinces to strengthen thesupervision and listed their decision-making to improve its own audit quality.