Abstract: There are different theories about the relationship between auditor quality and capital structure, and relevant empirical researches are very limited. Using the data of A share listed companies and their auditors from 2008 to 2011, this paper investigates the effect of auditor quality (proxied by industry expertise and scale of audit firm) on capital structure. The results show that there’s no significant association between auditor quality and leverage when single equation is used. The single equation method is inappropriate, however, auditor quality and leverage may interact with each other in theory and the result of Hausman test confirms the simultaneity between the equation of auditor choice and that of the determinants of leverage. Then, simultaneous equation approach is used to deal with the problem of endogeneity. The results under simultaneous equation approach demonstrate significant negative effect of auditor quality on leverage. Further tests show that such negative effect is more profound in state-owned companies or companies located in the districts where the legal institution environments or credit environments are good.