The Research On Governance Of Accounting Firms

In recent years, a few of accounting firms were involved in financial scandals of listed companies, that had a lot of harmful effects on social economy, so many people were paying more attention to the credibility and-auditing quality of accounting firms. Academe had also spread a hot discussion on it, but in our country, most of those studies focused on issues of organization form or pure internal management of accounting firms merely, while few of them were about the governance of accounting firms. With the development of capital market, accounting firms had become bigger economic organizations with thousands of employees than firms in sole propriety or partnership, so the principal-agent problems came forth. And the traditional managerial mode was not suitable for modern big accounting firms any longer. Comparing with the corporate governance in industry or business, that of accounting firms had both some similarities and differences. After learning from the theory of corporate governance, we specialized in researches on the governance of accounting firms.In this thesis, we studied the framework of accounting firms' governance, the characteristics of product and service of accounting firms, the information asymmetry between principals and agents, the traits of human capital and physical capital in accounting firms, and their influences on accounting firms' governance. We emphasized the agents' behaviors, agency costs and the way of controlling them, then analyzed the specific means of controlling the residual rights of control and reducing agency costs. Finally, we centralized on some realistic problems of arrangements of owners and senior managers, as well as the payments distribution between owners and employees, and put forward some constructive measures to deal with it.Main points and innovations include: (1) From the view of accounting firms' characters, we thought it's effective that initial principals were owners of both human capital and physical capital, and that the initial principals with high authorities were directors (members of managerial committee), while the power range of senior managers depended on the organization form of accounting firms, and supervisors should be independent and competent to be qualified to supervise others. (2) Human capital and physical capital both had special effects on agency costs. Senior manager and experienced CPA were both human capital owners who had the residual rights of control of accounting firms, and in order to prevent them abusing the residual rightsand decrease agency costs, we should match the residual rights of control with the residual claims, and give them spiritual incentives and competition pressures. (3) Applying the theory of accounting firms' governance to practice, we analyzed and studied some realistic problems of domestic firms and suggested some solutions.