Enterprise Ownership, Auditor Reputation And Audit Quality

The mixed-owners hip economy has currently become an important way in economic restructuring, and property rights reform of state-owned enterprises has become a core factor. Enterprises with different ownership play a different role in the economic development, and they possess different resource using efficiency and faced with different governance problems. As an external corporate governance mechanism, independent audit plays an important role in resolving the internal principal-agent problems, reducing information asymmetry and improving market efficiency. With the deepening development of the audit practice, the CPA firms are moving toward scale, specialization and branding which have formed a reputation effect, inspiring and restraining the auditors'behavior, affecting the auditing quality.In recent years, some audit failures resulted from financial fraud have been exploded, which triggered pervasive concern about the audit quality, and led to a crisis of confidence on auditors' reputation. The correlation existed between audit quality and auditor reputation is worthy of our attention. Furthermore, whether the clients'ownership exerts influence on the relationship between audit quality and auditor reputation is also taken into account.Based on the review of the theory of property rights, reputation, and the mechanism of the audit behavior, this paper made hypothesis about the relationship between enterprise ownership, audit quality and auditor reputation, selected 2011-2013 listed companies as samples, used ultimate controller's nature on behalf of the enterprise ownership, the probability of non-standard audit opinions on behalf of audit quality, and brand ranking on behalf of audit reputation, taking the impact of corporate governance and operating conditions into account. From the empirical analysis we concluded that the overall audit quality of state-owned enterprise is lower than the non-state-owned enterprise, auditors with high reputation show higher quality, and those auditors can compensate for the state-owned company's proxy defects and improve the audit quality.The research confirmed the effect of the auditor reputation mechanism, providing empirical evidence for local auditor's reputation building. It also pointed out the audit problems in different enterprises, and provided some references for the practice of reform and audit.