Opinion Shopping Of Financial Statements,Audit Market Competition,and Auditor Switching

Since this century,the auditing scandals in which some listed companies and firms conspired to issue false audit opinions have been exposed.The disclosed audit opinions have caused the turmoil in the capital market.The related changes in the disclosure of auditors' information have also aroused regulatory authorities' concern.The government has gradually issued a series of rules and regulations for auditor change.Academia has also discussed fiercely the manipulation behind auditor switching behavior.After combing the existing literature,it can be clear that most of the research on auditor switching is centered around the audit opinion shopping motivation of the listed company management authorities,and neglects the role of the external environment of the audit market-the degree of competition in the audit market with regional characteristics.Therefore,this paper combines the two aspects of the audit opinion shopping and the audit market competition,studies the behavior of the Chinese listed companies to change the financial statements audit institutions,and more fully understand the information disclosure problem of the changes in the audit institutions of the financial statements.Through a combination of theoretical and empirical methods this paper thoroughly analyzes the behavior logic of listed companies changing the auditing institutions of financial statements and uses the A-share listed companies from 2005 to 2016 as the research object.It uses the Lennox(2000)model to predict the company's change of auditing institution.Whether there is a covert financial statement audit opinion shopping motivation behind the behavior to find out the relationship between the financial statement audit opinion shopping and the auditor switching.On this basis,we use regional competition measurement method to analyze the influence of audit market competition on auditor switching with regional factors,and further discuss the mechanism of audit opinion shopping and audit market competition on auditor switching.In addition,by observing the two ways of changing the auditor to the "Big 4" accounting firms and changing to the "non-Big 4" accounting firms,the influence of audit opinion shopping motivation on auditor switching is deeply analyzed.The empirical study found that the listed companies have the motivation of the audit opinion shopping of the financial statements,and the motivation has a positive impact on the auditor switching;the audit market competition also has a positive impact on the auditor switching,and companies will change auditors more frequently when competition is high.In addition,there are no obvious interaction effects between the audit opinion shopping of the financial statements and audit market competition on the role of auditor switching.For listed companies changing to the "Big 4" accounting firms and changing to the "non-Big 4" accounting firms,the implicit financial statements audit opinion shopping motivation has a significant positive impact on the auditor switching.It can be seen that listed companies in the capital market do not have any of the above-mentioned methods to make changes.Behind them there are incentives to purchase financial statement audit opinions.This study examines the impact of the opinion shopping of financial statements and the degree of competition in the audit market on auditor switching from the empirical perspective,and provides new ideas for the existing research on the factors affecting auditor switching.On the one hand,the empirical results can help the regulatory authorities to grasp the operating dynamics of the current capital market,supervise the change of auditors and introduce relevant policies,on the other hand,it is beneficial to the government to arrange the economic resources reasonably and to moderate the scale of the firm.