Client importance and audit quality： Evidence from a-shares capital market data of 2002-2005.pdfVIP

Nov．2007，Vo1．3，No．11(Serial No~0) Journal of Modern Accounting and Au~ting，ISSN1548-6583，USA Client importance and audit quality：Evidence from a-shares capital market data of 2002-2005 NIEXin-jun (SchoolofEconomicsandManagement,South ChinaNormal University,Guangzhou 510006,ChinaJ Abstract：Using China A—shares capital market data of 2002—2005，this paper supports the conclusion that client importance is negatively associated with audit quality．Further,we partition the sample into Big 4 and Non—Big 4．In subgroup of Non—Big 4，client importance is negatively associated with audit quality statistically ． However,this association isn’t statistically significant in Big 4 subgroup．The conclusion is significant for the development of CPA finns． Key words：client importance；CPA behavior；audit quality 1．Introduction CPA finn s depend on the income from clients．and there exists an inherent economic deoendence between the auditors and their clients．This kind of economic dependence is called“the intrinsic factor which being contrary to independence”by MautsSharaf(1961)．DeAngelo(1981)pointed out that if the higher the proportion of the“quasi—rent”contacted with a client to all the“quasi-rents”of the finn is．the more the independent problem that client bring about will be．The clients who generate more fees for the finn ． namely more influential clients，may bring two aspects of influence：on one hand，if auditors maintain audit quality，they mi曲t be switched by the client，which will decrease their income；on the other hand，failure to issue reports clients deserved，often makes audito