Research on the Impact of Entity’s “Non-Professional Business” on Audit Quality
- 1 School of Business Administration, South China University of Technology, Guangzhou, China
Abstract
Driven by the excess return rate, the entity financial trends are becoming more and more intense, which the entity enterprise carrying out financial and real estate business are often advertised as “ work outside ” . In order to explore whether entity ’ s “ Non-professional Business ” can influence the audit quality or not, this paper takes A shares in the two stock markets of Shanghai and Shenzhen between 2007 and 2016 as a sample to find out their relationship. Entity ’ s “ Non-professional Business ” can be divided into direct and indirect entry way. Direct entry way means the entity carries out related financial and real estate businesses independently, while indirect entry means the entity buys existing financial assets through the secondary market and other channels. The results show that the direct entry of enterprises into the financial and real estate business will reduce the audit quality. And enterprises in the way of indirect entry into the financial and real estate business will improve the quality of the audit.
- Cleary, S. (1999) The Relationship between Firm Investment and Financial Status. Journal of Finance, 54, 673-692. https://doi.org/10.1111/0022-1082.00121
- Chen, Y.L. and Ma, Y. (2012) Bubble, Real Economy and Financial Crisis: A Cycle Analysis Framework. Financial Regulation Research, No. 1, 1-19.
- Research Group on the Environmental Problems of Certified Public Accountants. (2006) Research on the Practice Environment and Audit Quality of Certified Public Accountants—The Perspective of Supply and Demand. Accounting Research, No. 10, 72-78.
- Deangelo, L.E. (1981) Auditor Size and Audit Quality. Journal of Accounting & Economics, 3, 183-199. https://doi.org/10.1016/0165-4101(81)90002-1
- Palmrose, Z.V. (1986) The Effect of Nonaudit Services on the Pricing of Audit Services: Further Evidence. Journal of Accounting Research, 24, 405-411. https://doi.org/10.2307/2491144
- Xu, Z.D. (2011) Frontier of Audit Research. Shanghai University of Finance and Economics Press, Shanghai.
- Chen, D.H. and Zhou, C.Q. (2006) The Impact of Self Selection on Audit Fees—Empirical Evidence from Chinese Listed Companies. The Study of Finance and Economics, 32, 44-55.
- Liu, Y.G. and Mai, J.Q. (2006) On the Audit Quality of the Four Major Accounting Firms—Preliminary Evidence from China’s Securities Market. Journal of Zhongshan University: Social Science Edition, 46, 118-123.
- Shen, F.P. and Ding, H. (2011) Research on the Relationship between Audit Fees and Audit Quality—Based on the Perspective of the Different Shareholding Ratio of the First Major Shareholders. Economy and Management, 25, 20-23.
- Cai, C., Lin, X. and Zhao, S. (2005) An Empirical Study on the Impact of Audit Quality on Earnings Management—Empirical Evidence from the Manufacturing Industry in Shanghai Stock Market. Audit Research, No. 2, 3-10.