The Analysis Of Relationship Between Corporate Governance And Audit Quality

Audit quality is the last firewall of assuring the accounting information, and it affected the benefits of investors in the capital market. The earnings management is widespread existed in the listed companies when in the process of initial public offering, reflecting shares, and reversing losses. At this time, the function of audit whether to play its role is more linked to restrict the space of earnings management. Audit quality is that the CPA effectively detected and restricted the earnings management of the listed companies. In reality, the corporate governance of listed companies is not perfect; the management not only can easily use the advantages of information to do the earnings management, but also can decisively influence the appointment of CPA. Under such circumstances, audit quality is likely to be influenced by the corporate governance, because perfect corporate governance can make audit itself in a spontaneous demand at the same time, also provide better external conditions for high-quality audit services, and reduce obstacles of the management to disturb the CPA. Therefore, this thesis attempts to do systematic theoretical analysis and empirical research on the relationship between the corporate governance of the listed companies and audit quality.This thesis clearly defines the concept of corporate governance and the audit quality, and on this basis, chooses the ownership structure, the Board features as the internal corporate governance indicator, and chooses the control market of the company, debt financing and legal environment as the external corporate governance indicator, and uses the Jones model to calculate the absolute of discretionary accruals as a measure of audit quality standards. Then, select listed companies of China's Shanghai stock market in 2004-2006 as a sample, through the creation of regression test model to do the empirical research on the relationship between the corporate governance and audit quality. The results show that the corporate governance is significant effect on the audit quality, specifically: the first major shareholder stake, the state-owned shares, outstanding shares, the Board of diligence and level of debt financing of corporate governance significantly impact on the audit quality. However, this thesis found that there is no evidence to prove the legal-owned shares, the scale of the Board, chairman and general manager as one person to serve, whether the same time issuing B shares or H shares of the corporate governance significantly impact on the audit quality.