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This study aims to investigate whether and how auditors responded to the documented increases in earnings management after split-share structure reform (SSSR) in China, as manifested in auditors’ propensity to issue modified audit opinions (MAOs) after the SSSR. This study further investigates how client importance and auditor size influence auditors’ response to earnings management after the SSSR.

This study adopts logit regression models to investigate auditors’ propensity to issue MAOs to their clients that appear to manage earnings after the SSSR. Initially, including all Chinese publicly listed firms from the CSMAR database, the sample for final analyses consists of 21,904 firm-year observations for 1,290 unique listed firms during the period 2001–2020. The sample period surrounds the implementation of the SSSR, which started in 2005, allowing the examination of auditors’ propensity to issue MAOs after vis-à-vis before the SSSR.

The authors find that non-Big10 auditors in China were less likely to issue MAOs to their economically important clients who appear to manage earnings after SSSR. However, in the years of non-tradeable shares being released to the markets, both Big10 and non-Big10 auditors were less likely to issue MAOs to their economically important clients who appear to manage earnings. The findings suggest that auditors may have compromised auditor independence in response to earnings management after the SSSR, likely due to the pressure from their economically important clients.

This paper contributes to the literature, specifically the practice and theory in auditing, by shedding light on ever-changing auditors’ reporting behaviour, especially with regard to auditor independence. It also adds to the growing body of literature on the impact of institutional changes on auditing practices worldwide. The findings of this study further suggest that the recently documented declining demand for high-quality audits after the SSSR may be motivated by the clients’ intention to manage earnings after the SSSR.

This book chapter focuses on firstly social innovation and tools used to address the social needs and foster social innovation initiatives. Looking at the world economic forum and how it supports the social innovations, currency swings, low paying jobs growing rapidly, rapid change and growth as a result of high volatility and high returns, respectively. Secondly looking at the emerging market brought about by the social innovations and how they interconnect. Leading innovation emerging market has three main industries semiconductors, fin-tech, and electric cars. It also looks at the significance of technology in the development of business emerging markets, the role of technology in the emerging market and activities over the decades. Small firms in emerging areas face three major challenges which technology might help overcome. The challenges are trust, sustainability, and network. The role of technology replacing analog chip used for power supply, sensors, wideband signal make up the large semiconductors in the United States replaced with digital chip such as logical operations, data storage, computer information management all this have given birth to artificial intelligence, autonomous machines, self-driving cars, supply-chain management, cloud computing, and software-as-a-service (SaaS) applications are all made possible by digital chips. These are also used for e-commerce, mobile payment, fine-tech, 5G telecom, health-care advancement, remote learning, online entertainment, and cloud computing. Technical advancements that has sparked a revolution that would be especially advantageous for emerging market and small-cap enterprises are the causes of these benefits of how it has affected countries such as Europe, the United States, China, and India to mention a few.