Study On The Relationship Among The Control Of Large Shareholders,Board Characteristics And The Quality Of Corporate Audits

There is a significant correlation between the open and real degree of financial and related information and strategy from investors and it’s hard to avoid the imbalance of ownership and control right based on the modern property system by which it’s a favor to explore how to audit the listed corporate open information and improve the audit quality to academic researchers business officers supervisors even the Government.The audit quality is an important factor to ensure and protect the large investors’profits which not only effects the investors’confidence for the corporate but also decides the healthy development of the whole capital market and there is a must to recognize the factors on audit quality.Among the previous researches from the inner and outer, lots of scholars guess to elevate the specific skills of the certified public accountants and cultivate their business ethics by which make them more professional and more independent based on specific men and institutions. However, the listed enterprises are the audited objects and their managerial system is a constraint for audit quality and the board as a core connects the stockholders and managers by which to effect the auditing.Although China has implemented the equity division reform but the one stock monopoly is still existed even more worse than the western.So,on the one hand,it is hard to directly use the western research theories to explain and support China’s audit improvement,on the other hand,it is a must to consider how to control the biggest stockholders in the research how to improve the audit quality.Besides,When the biggest stockholders get the core control to the board,the recruiting system gets bad influence by which those turn to information producers as outer principals of auditing.So,the research has some theory and reality value. The paper would propose the precondition based on the theory analysis and use the related status to do the empirical test. The paper illustrate the features of the board audit quality and the relation between the two of the previous literatures then ensure the key variables of the board’s features simultaneously choose the rate of auditing fees as the substituted variable by the comparing analysis then come out paper’s hypothesis.China’s financial department issued the Ethical and Professional Standards of certified public accountants in Feb.2006and the standards has been implemented by2007.In order to make our samples’ status more effective,the whole listed companies of the A-circulation stock in Shenzhen and Shanghai stock markets has been treated as the samples totally1777,the paper is to research how’s change of the audit quality by the enhanced control by the big stockholders and which board features have the effect to support the audit quality improvement and which board features are useless on the conditions.By conferences on the previous related literatures and combination with China’s background of capital market and inner mechanism of listed enterprises,the paper proposes seven hypothesis as follows based on the control from bigger stockholders.H1,more higher control from bigger stockholders,more lower-quality outer audit.H2,a negative correlation between board scale and audit quality.H3,a positive correlation between independent director rate and audit quality.H4,a negative correlation between the unification of board chairman and manager and audit quality.H6,a negative correlation between the foundation of audit committee and audit quality and H7a positive correlation between the average directors’ salary and quality.By the regression result,H1,H3,H6,H7have been proved which reveals the independence of the board and the incentive mechanism do the support for improving the outer audit quality and the board scale the construct of the board leaders and the board meeting quantity have no the effect for audit quality improvement that expresses based on the control from bigger stockholders,the features of the board couldn’t develop its use what’s more the paper still tells the corporate scale and the business complex and the account firm scale have a prominent effect to auditing fees.According to the results the paper gives related suggestion to better board management audit improvement and protect medium and small stockholders’ benefits including optimizing the stock structure and ensure the proper stock-holding equilibrium of the bigger simultaneously enhancing the investing institutions to balance the related benefit related parties.Besides, optimizing the managerial mechanism of the board and the detailed methods include improving the independence of the board and incentive system then building a proper board scale and keeping an highly effective board meeting last enhancing the independence of the audit committee. What’s more, bettering the outer recruit system and making the medium and small stockholders have the recruiting choice and management and improving the protection to them.The paper has focused on the control from the bigger stockholders and analyzed the effect by the board features to the audit quality which is fresh and meaningful to make up that field researches of course some short-comings by the paper have been existed the auditing fees is treated as the audit quality isn’t perfect although it’s difficult to measure that abstract conception and the latter researchers can attempt to find a comprehensive and better indicator simultaneously the measurement to board feature is a bit limited by the paper and the latter scholars can consider the directors’ages and educations to better the board features and do the correlation between the board features and the audit quality.