The Effects Of Policy On The Restructure Of Big Accounting Firms In China From LLC To LLP

In2008, the government officially launched the bigger and stronger strategic, whohope to support our local accounting firms to realize the international dream. In thisprocess, the organization structure of accounting firms has always been a critical topicof academic and practice field. At present, Britain and America’s international "bigfour" firms are all adopting limited liability partnership (LLP). It shows a strongvitality because it keeps partnership culture and regime, and partners don’t need to beunlimited liability for other individual’s negligence. So in2010, the stateadministration for industry and commerce joint the ministry of finance issued atemporary formulation about boosting large and medium-sized accounting firms adoptspecial limited liability partnership. It ordered the local top ten accounting firmstransform their organization structure before the end of the year. So far, the local topten firms has changed completely, a new round of medium-sized firms’ restructuring isabout to begin. At this time, we study the major reform policy effect about the bigaccounting firms’ restructure has an important practical significance and theoreticalvalue.At first, this paper sorts three stages which the accounting firms’ organizationstructure’s development path in our country, Secondly, we analysis the complex effect.We believe this organization restructure’s effect should be various due to the expansivelegal liability. It could have influence on the audit quality, internal governance, firm’sperformance, brand reputation and core competitiveness.On the one hand, big accounting firms’ restructure in our country from limitedliability company to special limited liability partnership makes the restructured firms’differences before and after the transformation. On the other hand, it created thedifferences between the restructured and unrestructured firms at the same year. basedon the double differences, the estimated result effectively excludes other policy’sinterference at the same time and the interference from restructured and unrestructured firm’s fixed effect. So it just identifies the only effect brought by the policy change. Weuse difference-in-differences model, choose top twenty firms from the top one hundredaccounting firms estimated by the CICPA in2012as samples, and use the data in2009as a control group. We study the comprehensive effect on this big accounting firms’organization restructure.Through the analysis, we get the following conclusions:1. The large accountingfirms’ organization restructure to special limited liability partnership has a positiveinfluence on firm’s audit quality and the firms’ performance;2. There is no significanteffect on the firm’s internal governance. This may be because when the firm takeslimited liability company, internal operation is simulated as partnership. This makesthe reform’s short-term effect not obvious, just have an influence in the first year;3.This reform has no influence on its brand reputation. We believe that brand reputationneeds a long period to accumulate, the effect will not show up in a short term. From thethird year on, the reform’s effect is starting to emerge. It is also under our expectation;4. As all the comprehensive policy effect, the effect on the core competencies begins toreflect in the second year by audit quality and firm performance’s function.According to the above conclusion, finally, the paper describes the deficiencies andpractical advice.