TITLE:
Research on Industry Leaders’ External Auditing Demand in China—Based on the Signal Transfer Theory
AUTHORS:
Zhiqiang Wen
KEYWORDS:
Industry Leaders, High-Quality Audit Services, Signal Transfer Theory
JOURNAL NAME:
Open Journal of Business and Management,
Vol.4 No.1,
January
21,
2016
ABSTRACT: This paper validates the demand for audit’s signal transfer theory by China’s A-share listed company
data. As having a significant influence on the region and the industries where they locate in,
industry leaders will catch more attention. In this case, compared to other companies, industry
leaders have stronger demands for high-quality audit services, because it can transmit a signal to
the market that they are under a good company supervision. However, high growth industry leaders
don’t have a stronger demand for high quality audit services than other ones as we refer in the
hypothesis. The reason is that even industry leaders do not have external financing needed, they
will still choose high-quality audit services, as it can transfer a good signal to the outside world.