Research On The Motivation And Consequence Of ST Companies Changing Accounting Firms

When a listed company’s demands cannot be met by an accounting firm,it may risk seeking "collusion" by changing its accounting firm and issuing an unfair and legal audit report.At present,the number of listed companies in China changing their accounting firms is gradually increasing,especially for ST companies,which are generally facing adverse matters such as financial difficulties,audit negativity and operational damage,and have an urgent need to obtain a standard audit opinion to avoid delisting.This unusual change of accounting firm has received a lot of attention from regulators and investors,and is therefore worthy of study.In addition,there is little research on the behaviour of change of accounting firms that has been conducted on ST companies as a separate subject,and the change of behaviour of ST companies has outstanding characteristics,so this paper also has some practical significance.Through literature research method and case study method,this paper examines and explains the system and current situation related to the change of accounting firm of listed companies,where both subjects must file with the Securities Regulatory Commission and the Ministry of Finance,the competent authority,when the act of change occurs.A comparison of the data in the last five years from 2017 to 2021 reveals that the number of ST companies that changed their accounting firms rose from 15 to 72,accounting for The total number of changes rose from 20.55% to 37.11%,with changes relatively common among ST companies and more downward than upward changes.Statistics on the reasons for disclosure of 194 ST companies when changes occurred from 2017 to 2021 found that the majority of companies did not disclose the true reasons for the changes.In the study of its three changes of accounting firm from 2019 to 2021,the reasons for the changes were found to be: to avoid delisting,to purchase a favourable audit opinion,to reduce audit fees,to cover up the company’s financial difficulties and to hedge against risks for self-preservation.The consequences of the change are examined in five areas: change in audit fees,change in audit opinion,analysis of market reaction,improvement in the company’s financial difficulties and analysis of the quality of disclosure after the change.The analysis of the motives and consequences of the change of firm of HEMEI Group suggests corresponding recommendations: ST listed companies should strengthen their corporate governance,regulators should increase their supervision of ST companies,and accounting firms should maintain their independence.The research analysis leads to the conclusions of this paper: ST companies are more likely to change firms downwards when they are in financial distress,ST companies changing firms downwards will bring negative market reactions,and the real motivation of HEMEI Group to change firms is not disclosed.