Audit Quality and Information Transparency of Audit Firms in China: A Constructive Framework

Abstract

After an investigation of the audit information transparency system of securities markets in China, we found that auditor firms, as an independent authentication third-party, disclosure their auditing information very limited, which impede investors to evaluate auditing quality. Based on agency theory and auditing independence theory, we analysis the relation between audit quality and information transparency and proposed some policy suggestion to improve audit information transparency of Chinese securities market, which include making the specification between compulsory disclosure and personalized disclosure content, strengthening the audit quality and disclosure of independence related information, establishing and improving the supervision of the audit business and credit system.