The Impact Of Government Audit On The Capital Market

Audit administration issued the first Announcement on December 2003, which set up the system of our own audit institution.And audit administration issues notice every year. After 2003.what is more, number will be increasingly more than that of previous year .Audit announce lots of Audit notice of financial accounts of state-owned enterprises at half year of 2011, which shows the importance attached to the protection of state assets national audit institution. On the other hand, there is a special economical system and more diversify in our country and there are a large number of state-owned capitals in the capital markets. According to public economic responsibility, all areas of public capital should be part of the Government of the audit scope of the audit. On this paper, a comprehensive analysis of the current notice on the basis of the audit, we classify three categories notice of the audit of the capital market. The first is directly to the Audit Commission's audit of state-owned listed companies to publish notice; the second category is the Audit Commission for the state-owned company and its subsidiary's audit notice; The Group is listed on the capital market, the controlling shareholder of the company, Therefore, bulletin of such audit will also affect the capital market; The third category is social audit practice for the Audit Commission inspection of the quality of bulletin, which influence the capital market by affecting the community . Thus we research the information content of audit bulletin from the perspective of signaling mechanism. Mainly for capital market information content, Audit administration posses a high independence. Government Auditing tend to have higher audit quality and enforceable.And the focus of government audit and social audit is different. Therefore, government audit bulletin may contain certain information before the market did not grasp. This bulletin signals indirectly the government audit to the market. To some extent it reduces the asymmetric information on capital market. It can be seen that government audit and audit notices are helpful to quoted company on financial accounting, internal control and venture management from the attitude of public enterprise to the notes. Based on empirical research, there is no significant reaction on market. The mainly reason is that the first audit notices have no significant reaction on market. The audit notices that aim at quoted company have significant reaction. So we consider that the content of audit notices should be clearer and the audit notices should be timeliness. This paper mainly has three value and innovation. First we research government audit and government audit notices based on capital market. Second we understand the meaning of auditing from signal transmission mechanism. Third we comprehensively analyzed auditing notes that involved capital market, and analyzed the market reaction to the auditing notes by empirical research.