Accounting Firms'Supervision and Investors'Reaction——An Event Study Based on Policy Implementation Background
The Opinions on Further Standardizing the Financial Auditing Order and Promoting the Healthy Development of the CPA Industry issued by the General Office of the State Council of the People's Re-public of China aims to strengthen the supervision of accounting firms and continuously improve audit quality.Under the above event background,the paper using A-share listed companies as samples to in-vestigate the relationship between intensified supervision and stock returns of listed companies by ob-serving the market reaction to the"Opinions".It is found that,during the issuance of the above policy,the cumulative excess returns of listed companies are positive.Further research reveals that the listed companies in the following situations have higher cumulative excess return:with better external legal environment,employing non-big-four audit firms,employing audit firms without industry expertise,with restatement announcements,low information transparency,or privately-owned listed companies.
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