The Inlfuence On Audit Quality By Sotck Ownership Structuer Under The Condition Of Ulitmate Controller

Along with the accomplishment of the Ownership Reform, the capital market ofChina has been grown to mature gradually. The stock ownership of listed companieshas changed too, and this change leads to the demand of high audit quality. Theultimate controlling stock holder, as one of the basic factors in the stock ownershipstructure, has changed a lot too. This paper is conducted to empirically analyze theeffect on the audit quality that the various types of the ultimate controlling stockholders pursue, which is established on three theories, namely the agent theory amongthe stock holders, the investors protection theory and the game theory of theinstitutional economics. This paper deeply analyzed how the stock ownershipstructures affects the audit quality, including the character of the ultimate stockholders, the separation degree between the control rights and the cash flow rights andthe length of the stock control chains. And then, each of the cross effect, theseparation degree and the length of the stock control chains with the character of theultimate stock holders, on the audit quality will also be analyzed.This paper gets conclusions as follows. To begin with, under the condition of theultimate controllers, when the controllers are state-owned, the demand of the auditquality is no better than before, the company will not pursue high audit quality. Next,the results show that the bigger the separation degree between the ultimatecontrollers’ control right and the cash flow right is, the worse the audit quality is. Atlast, the length of the stock control chain will enhance the profit conflict between thecontrolling stock holders and other stock holders, so this condition has create thedemand of the high audit quality. On the other hand, each of the cross effect, theseparation degree and the length of the stock control chains with the character of theultimate stock holders, will affect the audit quality. Along with the separation degreedecreasing and the length of the stock control chain increasing, the state-owned ultimate stock owners will negatively affect the audit quality. The reason is that thelisted company with state-owned ultimate stock owners will have to cooperate withthe macroscopic policy, so that they will not work hard to pursue the economicachievement.This paper is consisted with six parts. The first part is introduction, in which thebackground, research significance and methods are explained. The second part is theliterature review, in which the recent research on the stock ownership structure andthe ultimate controller are summarized along with those aspects affecting the auditquality. The third part is the theoretical analysis and the hypotheses. According to thetheoretical analysis, this paper has proposed three main hypotheses form the aspectsthat the type of the ultimate stock holders, the separate degree of the control right andthe cash flow right and the length of the stock controlling chain will affect the auditquality. The forth part is the research design. This paper will use the logicalregression with data collected to progress the empirical research. The fifth part is toanalyze the empirical results. The sixth part makes the conclusions.