An Empirical Study On Corporate Governance Structure And Auditor Change

Recently, the listed companies in China frequently change auditing firms. According the statistics from the Chinese Institute of CPAs, there are56listed companies changed auditing firms in2000.and in2006-2010, there are154,147,139,130and122listed companies (not included the merger firms) changed auditing firm respectively. So, the speed and scale of auditing firm changed in Chinese listed companies have been greatly increased,In China, with the development of the securities market, the phenomenon of the listed company changing auditing firm become commonly. Behind this trend, part of the changes based on reasonable reasons, such as the good reputation of the larger auditing firms, the enlarged company; on the other hand, part of the changes may be malicious, and even impaired the auditor independence. Thus, with the malicious change of auditors, many of the problems of listed companies have been hidden. The reason for this is the lack of voluntary demand of Chinese listed company and the immature of our auditing market.Based on this, the auditor change issue has become a common concern of practitioners and academics. Domestic and foreign scholars have many research aspects about auditor change, mainly in the reason of auditor change, the market reaction after the change and regulatory about the change information. But the basic reason which lead to the auditor change--the governance structure of listed companies is focused by less attention.This paper based on the company governance structure, in order to comprehensively study the relationship between company governance structure (including:ownership structure, board of supervisors, independent directors, etc.)and the auditor change and find out the important factor of auditor change, then give some suggest to improve governance structure. After this, this paper further analyze the relationship between the auditor change and the abnormal accrual then find out the deep reason of the auditor change. This paper consists of six chapters, each chapter is as follows:Chapterl, Introduction. This chapter introduces the background and meaning of this paper, described the research ideas and research methods. Also, this chapter decided the paper writing arrangements and research framework, pointing out the expected innovation of research. This chapter is the overall planning of this paper.Chapter2, Literature Review. This chapter reviewed the relevant research literature at home and abroad, about the auditor change, corporate governance and the relationship between the auditor change and corporate governance. Further more, this chapter summary the existing research experience in the world. After the summary, this chapter find out the research opportunities. This chapter is the premise of this paper.Chapter3, Theoretical Analysis and Research Hypothesis. The main content of this chapter is the agent theory, the asymmetric information theory and the incomplete contract theory. Through the theoretical analysis, we find out the support of the relationship of the governance structure and auditor change. Based on this, we propose the research hypothesis of this paper. Therefore, this chapter is the research base.Chapter4, Empirical Study Design. The main research method of this chapter is empirical research method. First of all, we feature the governance structure of listed company by the ownership structure, the board of directors and the board of supervisors, and find out the relationship between the corporate governance structure and the auditor change, which explain the influence of company governance structure on the auditor change. Next, we use the Modified Jones Model to investigate the relationship between the accounting quality of listed company in the auditor change year and the auditor change decision, in order to find out the deep reason of the auditor change.Chapter5, Empirical Results and Analysis. This chapter further empirical analyse the research date about the two model. Do descriptive statistics analysis, single variable factor analysis and nrultivariate regression analysis, then have a summary about this chapter.Chapter6, Conclusions, The Main Innovation, Policy Implications and Future Prospects. The main conclusions of this paper, and the innovation and contribution to policy implications and the limitations of the study are summarized, then prospect the main direction of future research about corporate governance and auditor change.Through the empirical analysis of relevant data, the following conclusions are made:(1) The CEO of the listed company decide the appointment of auditorThis paper study from three main aspects which are the ownership structure, the board of directors and the board of supervisors. Use the three aspects to measure the governance structure of listed companies. The study found that:the actual owner of the listed companies and the CEO and chairman or the director in the board of directors is the same person which are as the explanatory variable are significantly influenced the auditor change decision of the listed company. while equity concentration, the independent of directors and the supervisory system of the listed company audit are not related with the decision-making. Possible reasons are:listed companies have a national background, administrative officials on behalf of the national shareholders, they are usually not effective monitoring and evaluation of the operators, thus creating a serious absence of state-owned shareholders, and thus the formation of "internal control phenomenon ", chairman and CEO of two rank-one or part two jobs-one will be the formation of internal control phenomenon ", the appointment of the auditor the right to fell in the hands of the senior officials of listed companies. The results show that the decisive influence of China’s listed companies, the actual appointment of the auditor’s decision-making by company officials, shareholders have little effect; China’s independent directors and board of supervisors system and did not play its due role, did not substantially improve the company governance structure.(2) The change of the listed company resulting in lower accounting quality.This article examines the correlation between the listed company auditor change decision-making with the company’s level of earnings management. Earnings management on behalf of the executive management of behavioral choices, this paper, the absolute value of the abnormal accrual measure the extent of earnings management of listed companies, and as explanatory variables, including abnormal accruals derived from the modified Jones model estimation, to audit teacher change as explanatory variables. The regression results show that the extent of earnings management and auditor change decision-making was a more significant correlation (P-value<0.1). Therefore, the study found that:the auditor change decision-making and Auditor Change of non-normal year there are more significant positive correlation between accrued, that is, the pursuit of the quality of the audit opinion is not a listed company to change the purpose of the audit division.