The Association between Audit Business Scale Advantage and Audit Quality of Asset Write-downs

This paper examines whether the scale advantage of auditing firms can be used as an alternative indicator of audit quality when the evaluation of audit quality is costly. The adoption of asset impairment recognition in China has brought about a considerable impact on financial reporting of Chinese 1 The authors are grateful for the organizers of the 1st China Journal of Accounting Research Symposium. We thank Dr. Wu Xi and Mr. Guo Jinlong for their constructive comments. We appreciate valuable comments from the referees and the editors. We also appreciate insightful suggestions given by Dr. Chen shimin from the Hong Kong Polytechnic University, Dr. Li zengquan from the Shanghai University of Finance and Economics and Dr. Xia lijun from the Shanghai University of Finance and Economics. This research is sponsored by Shanghai Educational Development Foundation (Grant no. 2008CG43). We also gratefully acknowledge the financial support of the major project of the Key Research Institute of Humanities and Social Science under the Ministry of Education (Grant no. 05JJD630027). Zhao ziye, Institute of Accounting and Finance, Shanghai University of Finance and Economics. Email address: [email protected]. Zhang bin, School of Management, Yangzhou University. Bin Zhang