Corporate Governance And The Independent Auditor Choice

With the development of Chinese listed companies' corporate governance and the supervision to independent audit being improved, part of Chinese listed companies' first big shareholders have become private. In the nature of private property rights, Chinese listed companies' corporate governance will tend to be rational and the corporate governance effect of independent audit will be improved. Things were found in the literature at home and abroad, such as:corporate governance is a variety of mechanisms, which is a modem solution to the company's problems caused by the separation of ownership and control of the agency; external Audit can alleviate the proxy conflict of the listed companies, and it is also a means of corporate governance to reduce agency costs; the corporate governance's supervision arrangements decide the external auditor's appointment, so external audit is a part of the corporate governance; and the most fundamental way to improve the audit quality is to improve the quality of listed companies on the audit services of their own needs. To improve audit quality and to raise the level of corporate governance, we should realize that to research the corporate governance factors affecting the quality of Chinese private listed company's audit has a double meaning.On the basis of theoretical analysis about corporate governance and independent auditor choice, we mainly choose Chinese non-financial state-owned and private holding listed companies during year2002to2010as samples, use descriptive statistics, correlation test and Logistic regression methods on the study and find that:(1) Compared to state-owned listed companies, Chinese private listed companies are more likely to choose high-quality independent auditors.(2) In the equity governance, managerial ownership and executive compensation have a significant positive correlation with the independent auditor choice; concentration of ownership has a negative but not significant correlation with the independent auditor choice; balance of ownership has a negative but not significant correlation with the independent auditor choice.(3) In the board governance, the size of the board, the proportion of independent directors and the audit committee also have a significant positive correlation with the independent auditor choice; the number of the board meetings and CEO of part-time chairman of the board have a negative but not significant correlation with the independent auditor choice.(4)In the Supervisory Board governance, the number of the Supervisors Board meetings has a significant positive correlation with the independent auditor choice; the size of the Supervisors Board has a significant negative correlation with the independent auditor choice.The innovation of this paper lies in following points:Firstly, we choose private listed companies in China which have developed rapidly in recent years as research samples and it makes the innovation of the study object; Secondly, the time span of2002-2010reflects Chinese listed companies'development of the independent auditing in recent years; Thirdly, in the empirical study, we put the more complete indicators of corporate governance and control factors into the regression model to ensure the accuracy and originality of the research results.