| Summary: | 碩士 === 淡江大學 === 會計學系碩士班 === 104 === This study discusses how the merger of CPA firms affects the value-relevance of audited financial statements. We hypothesized that the merging of CPA firms improves audit quality, which in turn enhances the value-relevance of audited financial statements. We studied the mergers of Arthur Anderson and Deloitte Touche Tohmatsu., CPAs, and Diwan, Ernst & Young and J.T. Lai & CO., CPAs, using listed firms in Taiwan as research subjects. Results showed that the value-relevance of clients audited by Arthur Anderson and Deloitte Touche Tohmatsu showed no significant difference before the merger. This is line with our expectation that because these two large firms were relatively similar in scale, the value-relevance of the clients they audited was not significantly different. The value-relevance of clients audited by Diwan, Ernst & Young and J.T. Lai & CO. also showed no significant difference before the merger. This is not in line with our expectation that clients audited by large firms have higher value-relevance compared to those audited by small firms. After the merger of Arthur Anderson and Deloitte Touche Tohmatsu, we found that the value relevance of audited profit and loss statements significantly increased. Likewise, following the merger of Diwan, Ernst & Young and J.T. Lai & CO, balance sheets audited for their clients showed significantly greater value relevance. These findings confirm our theory that the merging of CPA firms leads to enhanced value-relevance for audit clients.
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