Empirical Analysis About The Influence Of Equity Arrangements On Auditing Quality Of Listed Company In China

With the rapid development of modern social economy, the environment of business is more increasingly and competition is more intensive. In order to cover up internal operations and financial information, many listed companies tell lies. In order to ensure the healthy development of securities markets and improve the reliability of financial information, audit services need more and more attention. However, in recent years, the audit failure cases frequently occur. There are a growing number of scholars studying the audit quality factors. Equity arrangements make an important influence on audit quality as a part of the structure of corporate governance.This thesis studies the influence on the auditing quality of Chinese listed companies under different arrangement of stock equity. The arrangement of stock equity refers to the arrangement system between duty, power and benefit of main body of stock equity in Corporate Governance. It is the equilibrium between all interests which is formed in the process of taking part in affairs of the corporation. This paper describes stock equity from three aspects: the constitution of stock equity, concentration degree of stock equity and liquidity of stock equity. In this paper, empirical studies of the influence on the quality of auditing are given. For the sake of convenience, this dissertation selects listed companies which traded in Shanghai Stock Exchange and their major Accounting Firm of 2007, 2008 and 2009 as the study samples.This paper first describes the constitution of stock equity according to proportion of different kinds of stock equity and the nature of shareholder. The specific evaluation of stock equity includes the identity of the biggest shareholder, the proportion state-owned shares and the proportion of corporate shares. The identity of the biggest shareholder can be distinguished to state-owned and non-state-owned. Two indicators to describe the ownership of share concentration are the shares percentage that the first big shareholder holds and the degree of ownership restriction. The degree of ownership restriction adopts the square of the second and the fifth largest shareholder's share percentage. Liquidity of shares is described by the proportion of different sample companies'tradable shares. Auditor selection and audit fee are the substitutive variable of auditing quality in this paper. They have also established the Logistic model and the multiple regression model separately. We found that (1) there is an obvious relation between the probability of choosing the eight biggest accounting firms and the liquidity of stock equity. This paper found that the probability of entire circulation listing companies choosing the eight biggest accounting firms is significantly greater than that of non-entire circulation companies. This research is done through the T-test method of the paired-samples of entire circulation companies and non entire circulation Companies. (2) After controlling other relevant variables which impact on audit fees, the audit fees paid by company is negatively correlated with the state-owned status of the first greatest share holder.(3) After controlling other variables, the audit fee paid by companies appears nonlinear relation to the proportion of share which hold by the first greatest shareholder.(4) there is a negative relation between audit fees paid by companies and the percentage of state-owned stockholder; but the audit fees is correlated positively with the corporate equity.(5)The research in this paper provides empirical evidences for the arrangement of stock equity on the influence to the auditing quality China's listing companies. It gives a demonstration of which for most companies in our country at present, the proportion of state ownership is higher and the non circulation of stock equity etc. is a significant reason of low auditing quality.