A Case Study Of Frequent Auditor Switching Of Chinese Listed Companies

As a special agency independent of listed companies and government,not only does accounting firm be a supervisor of financial statements among listed companies,but also be a judgment of the financial report.Listed companies have the responsibility to provide true financial report and auditors issue a fair and objective audit opinion based on their professional ethics.If listed company can not provides true financial report,then auditors will issue non-standard audit opinion in the case of in the lawsuit.Similarly,if the audit opinion was not the listed company want,the company would be switching the accounting firm.To study the phenomenon of auditor switching,we can analyze the financial standing based on the company's background and make the investment decision.In addition,the study can also help us make a better understanding of the capital market,and reduce the information asymmetry between the report users and providers.This paper based on a corporation which has switched many times of auditors since been listed.We adopted the theory which combining the method and case to analyzing the auditor switching.In this paper we use the literature research method and normative research method to explain the content of auditor switching.Moreover,the analysis of the case company is used the means of method of theoretical analysis and comparison research.Firstly,we introduced the relevant provisions of auditor switching and made the detailed statistical analysis by year and industry in the theoretical part.Secondly,we divided auditor switching into voluntary switches and compulsory switches.Thirdly we introduced the general procedure and reporting requirements of auditor switching so that we can better understand the background of the behavior.Lastly we referred to the theory of the foundations of auditor switching----audit opinion shopping theory and display signal theory.In the case part,Tianjin Marine----a representative company,is chosen as of this study.It has switched 6 times auditors since been listed.By analysis,we found that financial distress and audit opinion shopping were the main reasons of auditor switching.We also found obvious market reactions after auditor switching.According to all the analyses,many suggestions were given in the end.Firstly,we suggested that investors should not only pay attrition to the frequent auditor switching of listed company,but also focus on the way of recognition of profitability,management changes and related party transactions,etc.Secondly,listed corporations should publish the detailed reasons of auditor switching in time.Thirdly,on the one hand supervisory organization should make the standard of the approval process of auditor switching,including the time and contents which the previous auditor and present auditor should reporting to CICPA.On the other hand,listed companies and auditors who break the rules should also be punished severely.This paper was divided into five parts.The first chapter introduced the rules of auditor switching,reviewed and classified relevant literature.It also mentioned the research method.The content of second chapter concluded the theoretical fundamental,relevant rules,and basic theory of auditor switching.The third chapter analyzed the behavior of auditor switching of Tianjin Marine.The fourth chapter showed the willingness and realization of the behavior.The fifth chapter made the research conclusions and put forward personal advice.