Global Journal of Business Management ISSN 2736-1721 Vol. 15 (1), pp. 001-011, January, 2021. © International Scholars Journals

Full Length Research Paper

Optimal strategy of performance creation: Evidence from audit firms in China

Yahn-Shir Chen1, Yu-Shu Cheng2* and Yi-Pei Liu3

1Department of Accounting, National Yunlin University of Science and Technology, Taiwan.

2Department of Accounting, Kainan University, Taoyuan, Taiwan.

3Department of Accounting, Providence University, Taichung, Taiwan.

Accepted 10 December 2020


This study aims to investigate the performance determinants of audit firm in the People’s Republic of China. Path analysis is applied to examine the association among auditor size, auditor quality, and financial performance of the Top 100 Audit Firms in China for 2002 - 2004 and 2007. Empirical result indicates a positive association between auditor size and auditor quality for both public and non-public company audit market firms. Auditor size and auditor quality are directly and positively related to performance in the public company audit market firms. However, only auditor quality directly relates to performance positively in the non-public company audit market firms. For both public and non-public company audit market firms, auditor quality is a mediator in the association between auditor size and performance. Specifically, auditor quality is the key factor in the creation of performance. Auditor plays an increasingly critical role in China. Empirical results obtained in this study not only contribute to the related literature but also provide useful information to practitioners for decision-making.

Key words: Auditor size, auditor quality, financial performance, audit firm.