The Research Of Relationship Between Auditor Reputation And Audit Prices Based On Ownship Prospect

Certified Public Accountant’s audit services can effectively reduce the information asymmetry and agency cost.The audit products has the characteristics of boht semi-public goods and credence goods.In additon, auditors based on the maximize benefits as their business objectives.These characteristics has led to audit fraud which has reduce the confidence of audit market. Signal transductions played by reputation mechanism can effectively relief the information asymmetry and guaranteed that auditors can play its due responsiblities in a fiduciary relationship. The research of the auditor reputation has significant meaning at the critical point when audit market has suffered the credit crisis.The article has two clues to explore the theory and practical issues of auditor’s reputation.On the one hand, we start from the economic consequences of auditor’s reputation to discuss the influence for audit fees by auditor’s reputation. As a individual in the market economy,what accounting firm has achieved is benefit maximization. The emphasis of the balance for establishment of long-term reputation and short-term interests is whether the audit income can make up for huge investment on the reputation established.The brand reputation can bring long-term and steady income for auditors.With higher reputation, the higher auditor income.The posititive cyclical effect has formed if auditor focus on the reputation.On the other hand, the paper intend to discover which organization form is beneficial to the establishement of auditor reputation in property rights-based perspective.The Law and reputation are important merchanism to protect the economic market. They supplement each other.Different organization form will lead to different legal risk.Moderate law risk will not only motivate auditors desire to matain high auditor quality but also reduce the chance of over-cautious behavior.The paper argues that the limited liability system just to meet the above discusstion,which is most conductive to the eatablishment of the auditor’s reputation.This paper combine theory and practice, through statistical analysis of the the SFC penalties firm as well as the reputation of China’s securities market premium regression model to verify the correctness of the theory in this article. At last,we raise some advices to ameliorate Chinese audit market’s conditions and promote more investment on auditor reputation.