A Study On The Reasons And Economic Consequences Of Listed Companies’ Non Mandatory Change Of Accounting Firm

Along with the in-depth development of the securities market,investors are becoming more and more dependent on intermediaries.Accounting firms,as independent third-party institutions,should conduct impartial and objective audits of the financial reports of audited entities in order to perform their economic supervision functions.In recent years,listed companies have repeatedly changed their auditors not only to directly affect the audit quality and conceal the true financial information of the company,but also to seriously damage the legitimate rights and interests of small and medium-sized investors,therefore,it is particularly important to study the non mandatory Change of accounting firms for listed companies.The paper consists of six chapters: Chapter 1,Introduction,firstly,focuses on the background and implications of the study,then systematically compares the literature research of domestic and foreign scholars on the reasons and economic consequences of non mandatory change of accounting firms of listed companies.Chapter 2 provides a background and theoretical overview,defining the core concepts of accounting firm change and highlighting the change of accounting firms in China.Chapter 3 provides an overview of the case company’s development history and successive firm changes,and finds that the real reasons for the changes are not mentioned in its announcements.Chapter 4 focuses on the substantive reasons for the non mandatory change of accounting firm of *STBikang based on two dimensions: listed company and accounting firm.In the listed company latitude,the analysis focuses on the response to financial distress,internal control deficiencies,imperfect corporate governance structure,purchase of audit opinions,and sending positive investment signals;and in the accountancy firm dimension,the promotion of audit filing system reform,auditor-client matching,auditor control over litigation risk,pressure from annual report inquiries,and damage to the auditor’s reputation.Chapter 5 explores the economic consequences of the case company’s change of firm.In terms of direct economic consequences,audit risk is analysed using the audit risk model and proxy variables,audit quality is analysed in terms of changes in surplus quality and financial restatement,and changes in audit fees and audit opinions are analysed in depth;in terms of indirect economic consequences,investor sentiment and reactions are explored using the event study method,and a comprehensive indicator evaluation system is established using factor analysis,with 14 indicators selected from five latitudes analyse the fluctuations in financial performance of*STBikang after the change of audit.Chapter 6 presents the conclusions and recommendations of the study.Based on the above research,this paper concludes that: firstly,the main objective of*STBikang’s non-mandatory change of accounting firm is to obtain a "clean" audit opinion;secondly,*STBikang’s repeated non-mandatory changes of accounting firm indicate its internal control failure and imperfect corporate governance structure;thirdly,in order to achieve effective control of audit risk,the firm will take the initiative to work with high-risk audit firms.Third,in order to achieve effective control over audit risk,the firm will take the initiative to terminate audit contracts with high-risk audit clients;fourth,non-mandatory changes will undermine the independence of the auditor and reduce audit quality;fifth,malicious changes to the accounting firm will trigger negative responses from external investors;sixth,repeated non-mandatory changes of accounting firms are detrimental to the future development of corporate performance.Based on the above research,the proposals put forward in this paper are as follows:firstly,the regulatory authorities need to improve the information disclosure system and strengthen supervision;secondly,the monitoring function of public opinion and the news media should be fully mobilised;thirdly,the framework of audit risk prevention and control by firms should be strengthened;fourthly,accounting firms should improve the professional training and business supervision system of auditors in order to promote the healthy and stable development of the capital market.Fifth,investors need to be highly alert to non-mandatory changes of accounting firms by listed companies.