A Study Of The Mechanism Of Auditor Reputation From The Perspective Of Market Mechanism

Audit service refers to a service that needs to be provided by industry professionals for the verification of the relevant financial data of listed enterprises that need to be audited,because the quality of the service cannot be measured by data,and the reputation of auditors is used as one of the ways to transmit signals on this basis.The auditor reputation mechanism includes four aspects: the formation mechanism,the mechanism of action,the damage mechanism and the repair mechanism;the influencing factors of the auditor’s reputation have two directions: one is the administrative supervision means implemented by the government and regulatory agencies(CSRC,the Ministry of Finance,etc.)through corresponding laws and regulations;the other is spontaneously formed by the market under the market mechanism.The market mechanism is a way to allocate resources through independent competition in the market,and it is also a movement mechanism in which various factors are organically linked and restricted in the market economy system.Based on the above background analysis,this article mainly explores the following issues:Unlike the more mature capital markets in developed countries,under the background of China’s gradually improved capital market,what changes have the reputation of auditors under the market mechanism? Aiming at this problem,by measuring the impact of the change of auditor reputation on the personal behavior of auditors,the impact of the role mechanism of auditor reputation under the perspective of market mechanism is studied,which is embodied in the impact of changes in the market ranking of accounting firms on the behavior of auditors,including audit fees and audit quality.The research is carried out from two aspects,the theoretical aspect is based on the agency theory of audit needs and the signal theory to investigate the mechanism path of the auditor’s reputation;the empirical part is based on the latest policy system,collecting the latest relevant data in recent years as a sample,through variable selection,model construction,and data analysis.In the end,it was found that: First,the "big four international" accounting firms only increased the audit fee with the improvement of the reputation of the auditor,resulting in a premium,and the quality of their audit services did not improve;second,for the two firms in the non-"international big four" sample group in the sample range,when their market ranking declined,they usually invested more resources in the audit process to supervise and improve,and finally the audit quality was improved,but there was no very significant difference in audit fees.