Corporate External Governance And Agency Costs Controlled

The agency cost between the principal and the agent has been the focus problem in the theory horizon and practice horizon. Many domestic and foreign scholars also did research between the relationship of company management efficiency and the agency cost. They believe that the perfection the corporate governance structure can reduce the agency conflicts and the agency cost. However, with the development of economy and the perfection of the internal management structure, the agency problems have not got the fundamental solution and the agency cost has not significantly reduced. This paper will break through the traditional focus on the research of the internal management and does a research of the relationship between the company exterior governance and the control of the agency cost from the perspective of audit pricing.This paper firstly introduces the basic theory of external governance and agency cost. In this paper, the concept on the boundary of external governance, the three kinds of agent relation are defined. The paper maintains that government, bank creditor, external audit institutions, market competition, executive market and cooperate control market are the main components of a company's external governance, and these elements stated above are also the key factors that effect the agency cost. Then, it analyzes the influence the external governance imposes on the agency cost from the perspective of audit pricing, and puts forward the hypotheses related. Finally, the paper makes an empirical verification on the basis of the hypotheses and put forward some suggestions.The empirical results show that the company exterior governance plays an important role in the control of agency cost. It mainly displays in the following aspects: If the ultimate controller of the company is the government, the agency cost is comparatively low. It explains that the government holding can reduce the information asymmetry between the principal and agent to some extent. The treatment of company's ST can reduce the agency cost between the big shareholder and the small and medium shareholders. Bank loan scale is negatively related to audit pricing. It shows that bank monitoring can reduce debt agency cost. The accounting firm scale is positively related to audit pricing. It shows that the bigger the accounting firm, the stronger monitoring effect to the agent. The audit pricing of accounting firm enterprise change is low happened in the past mainly because of the non-standard market in our country. The product market competition and audit pricing are positively related. The insignificant relation between the manager market and audit pricing shows that manager market's monitoring role has not fully played. The audit pricing of the company whose control has not transferred is higher shows that control market can effectively restrain the agency cost.On the basis of the theoretical analysis and the results of the empirical verification, this paper finally puts following suggestions to optimize the external governance to reduce the agency cost. The suggestions include improving the government's administrative regulation, defining the manage status of bank creditors, intensifying the monitoring of external audit institutions, perfecting the executive market, optimizing and standardizing the corporate control market. This research offers some certain enlightenment on deeper understanding of the external governance and reducing the agency cost through constructing and optimizing the external governance.