Research On The Governance Effects Of Audit Committee Of Listed Corporations In China

As an essential mechanism in modern corporate governance structure, audit committee plays an important role in alleviating agency conflicts and balancing the powers. The audit committee is deemed as a mechanism that can improve the quality of reported financial information. The responsibilities of audit committee include: supervising corporation financial report system, valuating an(?) supervising the corporation internal control system, internal audit and external audit. Since 2002, our country has started to promote the process of building audit committee in listed corporation. The question about whether audit committee can make a positive difference to corporation governance, which receives extensive attention by the capital market. Based on the data of the listed corporations in Shenzhen stock exchange from 2002 to 2006, this paper will make a systematic and comprehensive detection of the governance effects about audit committee from two perspectives, including the quality of reported financial information and circumvention of adverse audit opinion. Furthermore, the effects of special ownership nature of listed corporations on audit committee can also be examined. According to empirical statistics, we find out that the establishment of audit committee can remarkably improve the quality of reported financial information of listed corporations and circumvent adverse audit opinions. Apart from this, if the nature of the actual controller of listed corporation is different, audit committee would exert a different role in the quality of reported financial information. It provides empirical evidence for the governance effects of audit committee in listed corporations, and also facilitates the further improvement and perfection of audit committee system in China.