臺大管理論叢 NTU Management Review VOL.30 NO.2

247 NTU Management Review Vol. 30 No. 2 Aug. 2020 Upon collecting all required data for the analysis, we run the regression to re-test Research Question 3. Since the purpose of this examination is to explore the reasons for auditor-client realignment and whether the government initiative improves audit quality, the dependent variable in Model (4) is D_MAO . The mean value of D_MAO is -0.031 (-3.1%). The negative coefficient of D_MAO indicates that more firms received MAO from predecessor auditors and obtained non-MAO from successor auditors than firms that received non-MAO from predecessor auditors and then obtained MAO from successor auditors. As noted in the analysis, we classify the realignment reasons according to client- related ( REASON_CLIENT ), CPA firm-related ( REASON_CPA ), and government-related ( REASON_GOV ) categories. Moreover, we include the government initiative ( POST_2007 ) in the model as an independent variable as well. As reported in Table 9, the model used to investigate this inquiry is significant with a pseudo R 2 of 0.3647 ( p -value < 0.001). Compared to the main analysis done according to Model (3), as expected, the change model specified in Model (4) yields a lower pseudo R 2 . With regard to the three reasons for an auditor-client realignment decision, the results show that the coefficient of REASON_CPA is significant at the 1% level (coefficient = 1.100, p -value < 0.001). This result is similar to what has already been reported earlier in this study. Moreover, the coefficient of REASON_CPA is positive. Therefore, it shows that audit quality is likely to improve if a firm’s decision to realign with its auditors is driven by CPA firm-related reasons. On the other hand, there are no significant differences in audit quality when such a decision is driven by either client-related or government-related reasons. Moreover, the variable POST_2007 reflects that the government initiative to expand and strengthen domestic accounting practices does not significantly affect audit quality. When considering the joint effect of REASON_CPA × POST_2007 on audit quality, however, this interactive effect is significant at the 1% level (coefficient = -0.892, p -value = 0.005). Because the coefficient of the interactive effect is significant and negative, we conclude that the auditor-client realignment decision may deteriorate audit quality, if the realignment reason is driven by the CPA firms after the issuance of the initiative by CICPA under the directive of China’s MOF.