Empirical Analysis Of The Audit Committee On The Regulatory Effect Of Financial Fraud

? ? Audit committee is an important part of corporate governance, from the governance experience of listed companies in western countries, the main purpose of audit committee system is monitoring the financial information, and finally enhance corporate governance. In recent years, the system plays a significant role in improving corporate governance and the quality of financial information. Especially,the United States enacted the"Act for Accounting Policies and Investors Protection of Public Company"(also called "Sarbanes-Oxley Act") in 2002, reform the structure of corporate governance, including the audit committee system. This act has imposed a positive impact on the audit committee system in other countries and regions.The audit committee rules was formally introduced to China in 2002 and promoted in the listed companies. With the establishment and development of the audit committee rules, its effectiveness have drawn attention extensively. In view of China's listed companies, economic conditions and market conditions have own characteristics, scholars have few empirical studies on the audit committee system. Therefore, combined with the background of the Chinese institution, this paper analyses the influence of the audit committee on financial fraud.Based on the literature review around the world, this paper first summarize the rules of the audit committee both in the world and in China, from the motives, the audit committee's effectiveness, the factors affecting the effectiveness and the relationship between audit committee and corporate governance. In Chapter III,this paper describes the evolution of the audit committee.This paper use theoretical analysis and empirical research methods in Chapter IV, based on the data of the listed companies of Shenzhen and Shanghai Securities Exchange from 2005 to 2008.Then,this paper empirically examines the effectiveness of audit committee on financial fraud. Results from the logistic regression of 62 fraud companies and 62 non-fraud company indicates that the audit committee have a significant impact on financial fraud and concluded: audit committee played its role in the inhibition of financial fraud; independent directors also played a role in the inhibition, but had no significant effect; the board of directors and company size is related to the probability of fraud.Finally, with the results of the norms and empirical research, this paper propose a number of policy recommendations and puts forward to promote the audit committee system in China into more perfect.