| Summary: | 碩士 === 東海大學 === 會計學系 === 95 === In previous auditing literatures, researchers agreed the argument posited by DeAngelo(1981b) that there was positive relationship between CPA’s number of clients in audit firm and audit quality. Increasing business complementarity has become an important strategy for companies in the knowledge-based economy. I postulate that business complementarity will decrease audit quality because CPA’s increased economic dependence upon its audited companies. Therefore, it needs to re-test DeAngelo’s(1981b) perspective. I investigate whether the positive relationship between the number of clients in audit firm and audit quality (measured by discretionary accruals) in a supply chain, which business complementarity may exists among companies, in this paper. I find that audit quality is higher significantly if CPA audited one company than audited both the audited company and its supplier (or customer). In other words, after considering business complementarity, I find that there is negative relationship between CPA’s client numbers and audit quality. Further, I test whether auditor’s audit quality will change if the company and its supplier and customer were audited by the same auditor or not. All of my results do not support DeAngelo’s(1981b) argument.
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