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Does the Merger of Audit Firms Necessarily Improve Audit Quality?

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  • Liang Liu
  • Yulin Sun
  • Chuhan Zhang
  • Hu Ning

Abstract

This study examines the impact of audit firm mergers on audit quality in China. While government policies promote mergers for stronger audit firms, post‐merger outcomes vary. By analysing Ruihua—once the largest local audit firm before its collapse—we show that audit quality improvements depend on governance mechanisms and integration, not scale alone. Quantitative evidence highlights the importance of target selection, risk‐based management of auditors and clients, and centralised oversight. Practitioner interviews supplement these results by illustrating how these mechanisms operate in practice. These findings offer practical implications for policymakers and practitioners, emphasising the importance of sustainable integration strategies in emerging markets.

Suggested Citation

  • Liang Liu & Yulin Sun & Chuhan Zhang & Hu Ning, 2026. "Does the Merger of Audit Firms Necessarily Improve Audit Quality?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 66(1), pages 223-237, March.
    • Handle: RePEc:bla:acctfi:v:66:y:2026:i:1:p:223-237
    DOI: 10.1111/acfi.70108
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