An Empirical Research On The Impact Of Ownership Character To Audit Committee's Efficiency

Audit committee is an important institutional mechanism in corporate governance. Its original purpose is to build an independent financial governance power to ensure CPA's independence and enhance the realiability of financial statements provided by corporations. The study examines whether the establishment of audit committee would constrain earnings management, especially in firms with unique ownership character in China.The thesis uses empirical research methods to reveal the efficiency of audit committee to understand the effect of this policy and learn how to improve its efficiency in the future.This study first describes agency theory to analyse the role of audit committee on agency dilemma and then focus on concentration of ownership structure, the identity of largest shareholder, balance of ownership. Then, we study the efficiency and the impact of ownership character on audit committee based on datas of the listed companies of 2006 in China. Empirical results show that audit committee plays a role in constraining earnings management in the whole. However, the relationship is insignificant. The study segregates all companies into groups according to the rate and the identity of the largest shareholder, balance of ownership.Empirical results show that audit committee's efficiency is significant only in the largest shareholder's rate of (20%,50%]. The efficiency of audit committee is improved with balanced shareholders. However, the identity of the largest shareholder's impact on audit committee is not consistent with the hypothesis. Regression analysis don't show significant differences in the two groups.Shareholders'demand to audit committee and the way to select members are different.As a result,the efficiency of audit committee is varied.Finally, based on the analysis of the oretical and empirical results, combined with the exsiting specific issues of audit committee, relative suggestions are put forward to improve audit committee's efficiency,such as fosting effective demander and strengthening institution building to audit committee.