Empirical Study On Auditor Choice In Chinese IPO Market

When companies are in IPO, according to the related regulations, they need to disclose alot of information about the present situation of the company’s management and prospects.Even so, the information owned by the IPO companies and investors still has asymmetry. Inorder to overcome the asymmetry of information, IPO companies may choose all kinds ofsignals to transfer about the real value of the company and the private information to potentialinvestors, the behavior of choosing accounting firm is one of the signals. The existingresearch shows that the institutional environment in China and the degree of securities marketdevelopment have many differences with western countries. The demand of high quality auditservices is limited. But with the deepening of the reform of capital market, The degree ofmarketization of the small and medium-sized plate of securities issued and the financingability of IPO have the larger development and promotion whether the firms that suit for thewestern condition of economy choosing the principal-agent theory, in the capital market ofour county will be able to set up still lacks sufficient evidence.The paper making large scale accounting firm.(in this paper, referring to “top tens”) canprovide high quality and their services as its premise, using empirical research method,according to the theory of principal-agent theory, information theory and signaling theory asthe foundation, on the basis of the review of relevant research results at home and abroad andthe theoretical analysis, proposed the factors about the influence of small and medium-sizedplate company accounting firm select. Using the dates of small and medium-sized plate IPOcompanies that are in Shenzhen Stock exchange SME Board as sample, adapting Simunic&Stein and henriette van Niekerk&Simunic Logistic multivariate regression analysis methodto verify the nature of property rights, financial risk, lead underwriters and marketizationdegree, regional factors IPO companies inside and outside the two parts of the influence of thefactors on the IPO market accounting choice.According to the empirical analysis, we get the following several conclusions:Compared the companies controlled by nature person and government, the first companyis not more likely to choose large-scale accounting firm; A big and single IPO firms does nottend to choose high quality audit service; Higher leverage enterprises are willing to choosesmall and medium accounting firms; The bigger the enterprises financing scale is the morewilling they are to choose the “top tens”. Brokers who do listed counseling for the enterprisemore inclined to cooperate with large firms when companies choose firm, broker may produce certain influence to the enterprise, but the influence is limited; The situation ofauditing profession regional regime still exist. In the condition of the high degreemarketization provinces the audit market has a higher concentration than the others. Thedeveloping areas lack the economy environment to cultivate large firms. Market share issegmented by local small and medium-sized firms and foreign large firms marketconcentration is relatively low. The enterprises that are in the higher marketzation indexprovince are more willing to choose high quality and it services.Finally, I also analyse the cause of the results and put forward policy suggestions.