Balancing Audit Quality Improvement and Information Transparency:Insights from U.S.-Listed Chinese Firms Changing Auditors
The alteration of auditors can aim to enhance audit quality or to ensure information transparency.This study examines the impact of such changes in the context of the Holding Foreign Companies Accountable Act(HFCAA)in the United States,focusing on U.S.-listed Chinese firms that changed auditors between 2018 and 2021.This empirical investigation seeks to understand the real effects of auditor changes under enhanced audit supervision,shedding light on the regulatory focus and logic underpinning this policy implementation.The findings are twofold.Firstly,post-HFCAA enactment,U.S.-listed Chinese firms that switched auditors to comply with PCAOB audit paper review requirements ex-perienced a decline in accounting information quality.This decline was more pronounced in firms with a poorly reputed former auditor and a low institutional investor shareholding ratio.Secondly,the audit delays for these U.S.-listed Chinese firms significantly reduced.Those firms opting for PCAOB review of their audit working papers,thus ensuring transpar-ency,witnessed short-term outperformance following the first'Provisional List of Issuers'event announcement.This suggests capital markets and investors value transparency assurance.In the context of China's capital market moving to-wards a comprehensive information disclosure-based registration system,this study proposes potential future directions for the transformation in focus and logic of Chinese securities regulatory oversight.
Holding Foreign Companies Accountable ActChanging of AuditorAudit qualityInformation AccessProcedural Justice
NETL
NSTL
万方数据
