Abstract:Using signature CPAs of China's A-share listed companies as the research sample, this paper empirically examines the impact of issuing modified audit opinions on the reputation of signature CPAs, utilizing individual-level data on client number growth and audit fee growth. Using the growth rate of clients receiving standard unqualified opinions and the growth rate of audit fees as proxies for reputation, the study finds that issuing modified audit opinions enhances the reputation of signing CPAs, a conclusion that remains robust after a series of tests. The impact of modified opinions on the reputation of signing CPAs is more pronounced when issued to more visible clients or by more visible auditors. Heterogeneity tests reveal that the effect is stronger when non-standard opinions are issued to private enterprises and important clients, or when issued by non-Big Four auditors. The study further finds that this reputational effect persists for the following two years. Additionally, after issuing modified opinions, earnings management among clients in the auditor's portfolio who did not receive such opinions decreased. This study contributes to the literature by enriching the understanding of the relationship between audit quality and the reputation of individual auditors.