The Study On The Listed Companies' Demand For External Audit Under The Agency Conflict

Through reducing the stakeholders' risk of using financial information in listed companies, external audit is a method that can alleviate the agency conflict and finally improve the listed companies' value in the capital market. Therefore, external audit is regarded as an external mechanism of corporate governance in its nature. With further study about corporate governance, we find that the conflict between controlling shareholders and minority stockholders, which has been replaced by the conflict between the stockholders and management, has become the main agency conflict in most countries, including China. And this change has affected the listed companies' demand for external audit. So the author, choosing A-shares manufacturing listed companies as the sample, uses controlling shareholder's voting rights and cash flow rights exclusively generated from this agency conflict as the substituted index for the seriousness of the agency conflict and tests the relationship between agency conflict and demand for the external audit.There are six chapters in this paper. The first one is to introduce the research background and motive, make clear definitions about agency conflict and external audit and make the concise comments and review on the current situation at home and abroad. The second chapter is mainly about external audit's motivation. With introducing three kinds of theories, a theoretical support that is suitable to explain the China's current situation is found. In the third chapter, paper analyzes the possible kinds of relationship between agency conflict and external audit's demand. Taking the Chain's current situation into consideration, the fourth chapter analyzes the status of listed companies' demand for external audit from the aspects of the environments, subjectivities and objectivities of external audit. These analyses set a good foundation for the next paragraph. The fifth chapter is empirical research. The paper, using A-shares listed companies in our country as the sample, tests whether there is a demand to highly-quality audit in China's listed companies from the aspects of type of accounting firm, the audit fees and audit opinion and finally tests the economic result of retaining high-quality accounting firms in order to prove that high-quality accounting firms play a very important role in alleviating agency conflict and improving the listed companies' performance. In the sixth chapter, the conclusion that there are some demand for the high-quality external audit from the listed companies are made, but the demands of external audit are mainly decided by the percentage of the shareholder's voting rights.