| Summary: | Abstract
In order to meet the requirements of economic development, China's auditing firms continue to merge to expand the scale in order to improve the audit quality. However, the audit work of auditing firms has special characteristics. The audit quality of auditing firms directly affects the investment decisions of users of financial statements and affects the economic and social development of China. Only with good audit quality can the supervision function of audit be fully embodied. Therefore, audit quality is an important criterion for judging the quality of auditing firms. Auditing firms should also put audit quality in the first place to expand their scale by merging.
This paper makes regression analysis on all A-share listed companies in Shanghai and Shenzhen from 2015 to 2017, taking discretionary accruals as the proxy variable of audit quality under the current environment of China. The results show that there is no significant difference between the audit quality of large auditing firms and that of small auditing firms. This shows that large auditing firms are not necessarily able to provide better audit services than small auditing firms. To a certain extent, this shows that with the continuous promotion of the strategy of China's domestic audit firms to become bigger and stronger, and the continuous improvement of the domestic legal environment, China's domestic large-scale auditing firms face the same business environment as the international "Big Four" and there is almost no difference in their ability to provide audit services.
The contribution of this paper is to divide the firm into a more detailed division according to the scale. On the basis of examining whether there is a difference between the audit quality of large-scale auditing firms and small-scale auditing firms, this paper further examines the relationship between the international "big four" and large-scale domestic auditing firms in China. The limitation of this paper is that the rule of law in China is difficult to measure, and the factor of rule of law cannot be included in the model, which needs to be considered in the subsequent studies.
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