Listed Companies Accounting Firm Selected Factors

Since the restoration of audit system, China's audit industry has got a great development. In particular the establishment of the capital market in 1990s, provided a stage for certified public accountant to display their ability. The audit research in this area has also been the concern of many scholars. But, so far, the studies have focused on the supply side - the accounting firm study, and the demand side of the audit - listed companies on how to choose the accounting firm study inadequate, and our audit the market is still very immature in a buyer's market. Therefore, this paper will examine listed companies on auditor choice, using 2004 to 2006 years of data, analysis of the corporate governance structure of listed companies and the institutional environment how to influence its choice.Based on this, we described the related theories about audit demand, summed up the audit demand measurement methods. On the corporate governance structure, and the environment in the relevant literature has been reviewed, we established corporate governance structure, institutions environment variables. A listed company's audit choice as the explained variable set up seven variables about the corporate governance structure and institutions environment, respectively, the nature of company's controlling shareholder, the largest shareholder equity ratio, the second to fifth largest proportion of the shareholding, the proportion of independent directors, the number of board of directors meeting, the audit committee established and the market index. Meanwhile, the listed company's assets, ROE, growth in the main business, and its industries are chosen as control variables. The study is based on a sample of all only in the A-share list company besides financial companies; use the data from 2004 to 2006 for the Logistic regression analysis. The analysis results showed that: the listed companies' audit choice were significantly related to the nature of controlled shareholders, state-controlled listed companies were more likely to choose the small auditor than non-state-controlled listed companies. The largest proportion of shareholding, the second to the fifth largest shareholder equity ratio was significantly relative with the auditor choice, show that the company with the relative concentration of shares, power balances with shareholder structure needs the high quality of the audit demand. Independent directors proportion, audit committee set up with listed companies' auditor choice were no significant relevance, in one aspect, that China's current system of independent directors and audit committee system need to improve in the implementation, enforcement efforts; The number of board of directors meeting and auditor choice positively correlated, means more diligent of the board needs higher quality audit and better protect the interests of small shareholders; Market index and the listed companies auditor choice were significantly correlated that with the improvement of the institutional environment, the quality of listed companies for the audit requirements also will be improved. Based on the empirical evidences, the paper provides some advice on improving company governance.