| On November 16 of 2009, Chinese Ministry of Finance and China Securities Regulatory Commission (CSRC) jointly issued "Pilot Initiative for Public Accountants Engaged in Audit Business of H-Shares Enterprises". On December 7 of 2010, above two mainland departments and relevant departments of Hong Kong got to a common view which stated that the mainland major accounting firms were allowed to use mainland auditing standards as the basis of providing auditing services for the H-Share enterprise in the fiscal year which ended after September 15. This is an important opportunity for the 12 accounting firms which have the qualifications to provide services for H-Share companies since they can further expand markets as well as be more internationalized. However, it is still unknown whether the effect of this new policy on the quality of the big twelve accounting firms is positive or not.It can be inferred from the point view of theoretical level that accounting firms which have H-Share auditing qualifications can improve their professional abilities and strengthen their independence through a series of measures:(1) Big Twelve will perfect the internal governance structures, strengthen the integration management in accordance with the requirements, cultivate international talents since the Ministry of Finance, CSRC and CICPA will pay close attentions to them; (2) Part of the Big Twelve expanded their scales through merger and reorganization which lower the firm’s economic dependence to the customer, reduce the legal risks and save more resources for personnel training and management innovation; (3) The Hong Kong market opens the road to the internationalization for the Big Twelve which enable them to expand their scale and learn from excellent foreign accounting firms; (4) The Big Twelve have realized the transition to limited liability partnership which will increase the risk of litigation and accountants will be more cautious in the audit process.Under the background of the cancellation of the H-Share dual auditing policy, this thesis tests whether it achieved the desired effect by focusing on the change of audit quality from the year of 2007 to the year of 2012 since 2010 is the year of watershed. In view of the particularity of the big four accounting firms, the Big Twelve are divided into two sample groups. One is the Big Four and the other is the Big Eight. The audit opinion type and the discretionary accruals are chosen as the measurement indicator of the audit quality and logistic regression model and multiple regression model are set up respectively. The results show that the audit qualities of the Big Four and the Big Eight have not been significantly improved when the audit opinion type is used as the measurement indicator. In contrast, the audit quality of the Big Four was significantly improved when the discretionary accruals are used as the measurement indicator, but the audit quality of the Big Eight has fallen. Therefore, it can be concluded that the Big Four lead the way on the aspect of customer surplus inhibition and the Big Eight didn’t get any improvement. So there is still a large gap between domestic accounting firms and international peers.This thesis provides empirical evidences for the H-Share auditing policy effect by using the audit opinion type and the discretionary accruals as the substitutive variables for audit quality. In addition, this thesis also provides advices for further audit quality improvement and local regulators management on the basis of comparing the auditing quality improvement extent of local Big Eight with the international Big Four. |
