| A series of financial fraud is the reason for the emergence and development of audit committee.As a significant institutional arrangement in the modern corporate governance,it has played a very important role in maintaining the quality of financial reports and improving the level of corporate governance.Foreign scholars have made a large number of studies on the efficiency of audit committee in corporate governance,and their studies have proved the effectiveness of audit committee.After Enron,the United States instituted and implemented "Sarbanes-Oxley Act" in July 2002,which made strict norms on corporate governance system,and further emphasized and enhanced the audit committee' status and role in corporate governance.In 2002,Securities and Exchange Commission of China consociation with the original national economic trade committee released the public corporate governance standards,which provide:"the public company board can establish specialized committees in strategy,audit,nominate,salary,check etc…according to the relevant resolution of the shareholders' meeting".Till today,audit committee has developed about sever yeas in china.In that case,whether do these audit committees come to a expectation result in corporate governance and upgrade the quality of accounting information? This is the problem which will be discussed in the paper.To make an empirical analysis on the governance efficiency of audit committee of Chinese listed companies can not only enrich the empirical evidence of the study on audit Committee,but also help us to understand the status of the audit committees' performance in Chinese listed companies' corporate governance.Further more,it can provide some reference to the audit committees' further improvement in china.First of all,this paper reviews the development process of audit committee,through which we can see that audit committee was generated by some financial scandals and gradually developed under the needs of related organizations,legislative bodies and corporate governance structure, with the aim of improving the independence of internal and external audit,so as to improve the quality of financial information and corporate governance.Then this paper describes the two theoretical foundation of audit committee,the principal-agent theory and the corporate governance theory.The principal-agent theory is the theoretical basis of audit committee,which can not only explain the necessity of the existence of audit committee in the enterprise,but also can explain the audit committees' functions and position in the corporate governance.Corporate governance theory is a set of institutional arrangements to solve the principal-agent problem,and the purpose of the establishment of audit committee is to seek an independent force in the corporate governance structure to ensure the accounting information's authenticity and reliability.That's the reason why we take the corporate governance theory as a very important theoretic evidence to audit committee. After that,this paper analyses the responsibility of audit committee.Although the specific responsibilities of the audit committee may be different in different countries,on the whole,the basic duty of audit committee is to enhance internal audit and external audit's independence,so as to improve the quality of financial information.In order to study whether the audit committee of China is effective in listed companies' corporate governance,this paper chooses the visual angle of the internal audit and external audit. Before the empirical analysis,this paper analyses the relationship between the efficiency of the audit committee and internal audit and external audit,and chooses audit fees and the change of accounting firms as alternative variables for empirical analysis.This paper selects 2006 and 2007's listed companies in Shanghai as total samples,using which to make empirical studies respectively on the relationship between audit committee' establishment and audit fees and the change of accounting firms.The empirical results show that under the case of the accounting firms not being changed,there was a significant positive correlation between the establishment of audit committee and changes in audit fees.Therefore,this empirical result doesn't support the original hypothesis, neither provide evidences for the audit committee having strengthened the independence of internal audit.The reason may lie in the short development time of audit committee,and it may prefer to employ high-quality accounting firm and require external auditors to expand audit coverage out of its control over risks or preventing the loss of reputation by false financial reports,which eventually led to an increase in audit fees.In addition,the empirical result of the relationship between the audit committee' establishment of listed companies and the change of accounting firms shows that in the control of the impact of other factors,there is a obvious negative correlation between the audit committee' establishment of listed companies and the change of accounting firms.This study result shows that the audit committees of Chinese listed companies have fulfilled well its duty that communicating with external auditors,hiring or exchanging the external audit institution,which say that the audit committee of Chinese listed companies have played a positive role in strengthening the independence of external audit. |
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