Public Company Audit The Protection Of Small Investors

Auditor plays an important role in the protection of small investors'interest. This paper focuses on the protection effect of the auditors ahead of the investment cooperation, after and during the cooperation. Through particular case, this paper finds that there is high possibility that the auditors and the corporation estimate a higher profit forecast together ahead of the investment cooperation,that is, the reliability of the forecast in prospectus of the listed corporation is not high. According to the data from 2003 to 2005 of the Shang Hai and Shen Zhen markets, we find the evidence that audit opinion has a certain effect on investors after the cooperation. The investor reflected fast to the auditors'opinion, when the corporations received non-standard audit opinions for the first time, but nearly had no reflection to the auditors'opinion, when the corporation received non-standard audit opinion after received this kind of opinion for several times. This paper also summarizes the methods, in which large shareholders tunnel small investors'interest. These methods include: purchasing and selling between the related parties at unfair prices; transferring corporation's interest through occupying capital and load assurance; reducing corporation's development chances. At the same time, we also find the aim of the large shareholders'propping is to help the listed corporations to keep their qualification to finance, and then tunnel them. According to our analysis, it is necessary to strength monitoring over auditors and the degree of the law punishment on them, and to highlight the auditors'aware of risk. Besides that, we also offer some methods to improve the auditors'services quality, like auditing the purchases and sales between related parties, C/A of the listed corporations, corporations'load item more seriously etc..