Size Of Accounting Firms And The Quality Of IPO Audit

The GEM’s IPO audit has gradually become a new number of CPA’s business field. In2012,the counterfeit phenomenon of some IPO companies, such as Xind.d. company, Wanf. Biotechnology company, Tiann. technology company and so on, has been exposured. People in our society can’t stop suspecting that the CPA firms, especially the larger firms really played a role or not in preventing false accounting information and guaranting the healthy development of the stock market during the IPO audit. The paper aims to reveal whether auditors and CPA firms could effectively improve the audit quality, and whether it can effectively restrain the earning-management during the IPO audit process by becoming bigger, stronger and cultivating professional audit personnel.First, the use of normative analysis, from the start of modern risk-oriented auditing theory; combined contract theory, the principal-agent theory and game theory, summed up the meaning and resolve audit quality metrics; Secondly, combining the characteristics of IPO audit services and related laws regulations, from all aspects of the causes of audit risk considerations, comprehensive audit quality control factors; Finally, empirical way, various theories in the above mentioned reference design based on the hypothesis, into multiple linear regression equation, China’s capital market experience and apply the theoretical assumptions of the statistical data, correlation test and descriptive empirical analysis, in order to support the formation of the theoretical results.The IPO listing Corporation in GEM from2009to2012are chosen as the check samples for study, we established the IPO-audit-quality model and used the accruals as a proxy for audit-quality, the empirical study has been conducted on the relationship between the size of CPA firms and the audit-quality. It is showed that, the impact of audit quality in China’s first listing Corporation is the CPA firm’s employees, not the type, the annual revenue and the ranking of the CPA firms. The audit quality between "big ten" and "non big ten" does not exist significant differences,"Big ten" even worse than "non big ten".