Study from Economic Results on Auditor Reputation

Audit market is a typical information asymmetry market, audit service characteristics of public goods and trust products, reputation mechanism to guard against the auditor's "opportunistic" and reduce the agency cost has irreplaceable important role. Based on the 2011 and 2012, the Shanghai and Shenzhen two city a-share listed company annual reports data as the research sample, using economics, management, game theory and other multi-disciplinary basic theory, combined with our unique system background, with manipulability respectively accrued profits and market share as indicators of audit quality and of auditor reputation, with cross section modified Jones model and regression test model for the empirical model, test the relationship between auditor reputation and audit quality in our country. Empirical studies have found that an auditor reputation can inhibit the company earnings management behavior, auditor reputation incentive to improve the audit quality significantly.