Research On The Effect Of Local Audit Firm Mergers

The foreign study of firm merger is stem from the event of the big eight. The spontaneous merger aims at expanding business scale, enhancing international audit market share. Chinese scholars should be think about the special situation of our country that our government has prompted firms merger under the policy guidance. To promoting our country accounting firm development, Chinese institute of CPA formally promulgated the file – "Several Opinions on Accelerating the Development of the CPA profession" in 2006, and quickly opened another round of merger.From domestic scholars in the study of accounting firm merger can be found that the main indicators used to measure firm merger consequences are audit quality, audit fees, customer structure and industry expertise, and so on. Most scholars mainly from the perspective of a certain indicators to explore the effects of merger, the effect of the study results is not comprehensive. So this article stands in the angle of the accounting firm, considering both the audit quality and audit fees changes. The audit quality and audit fees are the most directly indicator to measure whether the firm really get "bigger and stronger" or not. Since the 2006 some scholars explore firms merger effect problem through empirical research. This type articles mostly using large sample data to analysis, it can be observed from the angle of macroscopic overall merge effect, but poor pertinence. This article thinks that firms merger problems with certain individual differences, and different firm merger purpose and firm culture itself, quality control system quite different, therefore, with the result of the large sample analysis pertinence is not strong, the empirical research part of this article selected Ruihua and Zhitong two merger cases with data, based on the analysis of two typical merger effect. This article targets to China’s large and medium-sized firms that merger issues to explore.This essay selects the change of audit quality and audit fees to measure firm merger effect, of which the audit quality on earnings management of discretionary accruals as substitution variables, with modified Jones model calculation discretionary accruals. This essay performs descriptive statistics analysis and multiple regression analysis on Ruihua and Zhitong cases date. This paper found that the audit quality and audit fees are improved, but not dramatically. Therefore, this article concludes that although under the influence of the policy guidance in China firm size has expanded through the merger, but that has not really realize the vision of "bigger and stronger". Therefore, this paper argues that in the reality that our country’s audit market is still not mature, it also needs the joint efforts of government and public accounting firms to make the vision of "bigger and stronger" come true.The innovation of this paper is that from accounting firm angle, from two aspects of audit quality and audit fees to comprehensive validation the merged changes, and combination of full policy in our country and the situation of the audit market, profound analysis about the research conclusion, and then puts forward the personal conclusions and recommendations. As limited level of writer and shorter time, there are limitations of this study. Due to the combined period shorter, the hysteresis problems of audit quality and audit fees cannot be tested.