Abstract
This paper studies the tendency towards developing China's national accounting industry against the international Big 4 accounting firms. Studying a Chinese sample from 2003 to 2014, covering the recent structural reforms (i.e., the Split-share Structure Reform (SSSR) in 2005 and the announcement of Document 56 in 2009) the paper concludes that such reforms increased the tendency to hire higher quality national audit firms compared with the international Big 4 audit firms and other small audit firms. This study also highlights the role of market development in improving the likelihood of hiring high quality auditors, and how it counteracts the state influence over the firm's auditor choice. By splitting high quality accounting firms into: the international Big 4 and the Chinese national Big 6, this paper extends the literature on political economy and auditor choice and explains how China is developing its national accounting industry through issuing state policies and restructuring the accounting industry.
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