The Property Of Ultimate Controller And The Choice Of Auditor

Efficiency of audit market is the siginificant foundation of well development of securiety market and resources allocation,where the premise is to stimulate demand of high quality audit.In China,government cultivates auditing demand,and promotes auditing quality with a series of reformed institutions.At present,audit market is capable to provide high qulity audit services,but high quality auditing demand is insufficient.Most Chinese listed companies perform in Stock Pyramids,whose ultimate controller plays a part in the choice of auditors.Interest institution differs in different property rights affecting resources allocation,which results in different motives in the choice of auditors.In order to explain the reasons why high quality auditing is deficient,this dissertation begins with the nature of ultimate controller to improve resources allocation and give suggestions to policy-maker.The paper chose Stock- A companies from ShenZhen Secrity Exchang among 2005 to 2007,based on the decision of ultimate controller on auditors.Firstly,the dissertation reviews the three assumptions of demand audit,the nature of ultimate controller and literature, displays a framework for ultimate controller and the choiece of auditors,and anlyzes the special institutional background.It focuses on the following problems:â…°.Do firms with different ultimate controller differ in the demand of audit,and how to affect the choice of auditors?â…±.Do firms with different ultimate controller differ in the demand of imformation,and how to affect the auditor choice?â…².Do the change of ultimate controller influence the auditor change?Resultly,we find out that:â…°.Firms with different ultimate controller differ in the demand of audit.In state owned firms,there exists obvious positive correlation between the separation of Cash flow rights and Control rights and the ratios of management cost and assets and high choice of audiitors,but not in private firms.â…±.Firms with different ultimate controller differ in the demand of imformation.In state owned firms,there is not obvious correlation among IPO,the demand of refinance and long term borrowings.On the contrary,the correlation exists in private firms. â…².The change of ultimate controller affects the choice of auditors,and there is obvious positive correlation.Based on normative research,the paper combines with empirical research in Logistic and OLS.It firsly provides a framework with the impact of ultimate controller on the choice of auditors in which the nature of ultimate controller is integrated with the assumption of audit demand under Chinese special institution,analyzes the audit demand with different ultimate controllers.The paper discussed the change of auditor in respect of change of ultimate controllers,clarities the partial reasons of deficient demand auditor,and guides high quality of demand audit.