Research On The Auditor Reputation Economic Consequences Based On Signaling Theory

CPA auditor is known as an "economic police" in the capital markets, the auditor'services can alleviate the information asymmetry to a certain extent, so as to effectively enhance the reliability of accounting information. In recent years, however, a series of major firms and certified public accountants in fraud, financial fraud scandals, such as happened in recent years, Yun nan green earth, Wanfu Biotechnology (Hunan), Zixin Pharmaceutcal(Jilin), Green-Land Biological Technology(Yunnan) etc. audit failure events, greatly weakened the investor confidence in the capital markets. The investor doubt the auditing report'offered by the CPA can be trusted or not. In the auditing market, the auditing work need have professional knowledge of accounting and auditing and have rich accounting experienced auditors to perform, most investors are lack of professional knowledge of accounting, can not effectively distinguish authenticity of accounting information, can not directly observe the auditing quality, measure the auditing quality also controversial. Auditor reputation as an information resource, is an important standard to measure the auditing quality high and low to a certain extent, thus solve the problem of the information asymmetry in the audit market, therefore, investors tend to rely on the CPA firm'brand or reputation. In September 2011 CICPA published "The Chinese CPA industry development planning (2011-2015) ",made it clear that Chinese CPA firm should be" vigorously create autonomous well-known brands". In January 2013,the CICPA held in Beijing about "accounting firm brand construction the first meeting of the working party", making the "brand culture construction" as the "honest cultural construction year" activities in 2013, one of the important content of the ministry of finance wang jun, deputy secretary and President of li yong's vigorously support, this shows that the auditor reputation construction has been on the agenda. Under the policy guidance, the auditing practice and the auditing theory make a high attention of auditor reputation, from the perspective of the signal theory, research the economic consequences of the auditor reputation'consequence has an important significance.In this study of the auditor reputation reviewing and summarizing the domestic and overseas theory about the auditor reputation, introducing the theory of signal transmission, reputation premium theory, insurance theory and game theory as the theoretical support of the full text. First of all, through the way of theoretical analysis, from the perspectives of supply and demand, analyze the forming mechanism of auditor reputation; From incentive mechanism and reprimand mechanism two aspects elaborated the auditor reputation mechanism; Auditor reputation effect on firm's audit quality, mainly depends on the reputation for the firm itself and for the auditees whether has enough economic consequences, this study summarized from the aspects of theoretical analysis of auditor reputation economic consequences. From the perspective of firm, the formation of high reputation helps to firm obtain audit premium income, increase the market share, enhance brand credibility, etc.; From the enterprise point of view, high reputation is helpful to reduce enterprise issued IPO underpricing, reduce corporate debt financing costs, improve enterprise value, etc.; Reputation will bring negative effects to firms and audit clients. Second, select the experience of the a-share market in 2012-2014 data, the empirical research on auditor reputation effects on audit pricing, and found that the higher the auditor reputation, public accounting firms, the more able to obtain A higher audit premium income, confirmed the auditor reputation and audit pricing is related to the hypothesis. Finally, put forward the corresponding countermeasures from macroscopic and microscopic two aspects, from the Angle of the ascending auditor reputation, improve audit quality, for our country the auditor reputation research provide reference and enlightenment.