Corporate Governance Characteristics And The Risk Of Material Misstatement In The Correlation Research

Since the21st century, the high frequency appearance of domestic and foreignfinancial statements fraud has forced theoretical to pay attention to the research on theefficiency of corporate governance. Meanwhile, the auditing profession has restarted thestudy and improvement of the audit model. Assessing the risk of material misstatementbecome the start point and orientation of the audit work, which is introduced into theimproved audit model. Basing on the perspective of corporate governance and according tothe current corporate governance features and performance of the risk of materialmisstatement, this article mainly studies the correlation relationship between the corporategovernance features of listed company and risk of material misstatement.Features of corporate governance for listed company contain many elements.Considering the particular background of the listed companies in China, the correlation ofthe risk of material misstatement, the quantification of index and the availability of relateddata, with reference to the existing literature, this article studies the correlation relationshipbetween the corporate governance features of listed company and the materialmisstatement risk mainly basing on three essential factors: the ownership structure, thefeatures of the board of directors and the features of the board of supervisors.The special background of China’s economic development made a profound impacton the governance structure of listed companies. Combining with China’s special economicdevelopment path, the author found that there are some issues existed in the three essentialfactors: complex ownership structure, the dominance of state-owned shares and anexcessive concentration of equity in corporate governance structure; unbalancedmanagement and operating mechanism of the board of directors; low supervisionefficiency of the board of supervisors. The failure of the governance structure of listedcompanies in China led to business risk and increased the risk of fraud, resulting a highlevel of risk of material misstatement in the accounting information of listed companies.Based on the method unifying empirical and standardize study, this thesis, which useslisted company receiving CSRC announcement for irregularities as substitution variablesof risk of material misstatement and features of corporate governance as explanatoryvariables concluding component ratio and concentration ratio of equity, the scale andindependence of board, holding the current post of chairman and general manager, the scale of the board of supervisors on the basis of controlling the company size, profitabilityand other factors, focuses on the research of constructing the Logisti regression model ofempirical analysis.The empirical results show that equity component ratio, ownership concentration,independence of the Board and the Supervisory Board size and other factors impact on therisk of material misstatement in varying degrees. It also analyzes the reason why theempirical results are not consistent with the expected assumptions. Based on the analysis ofthe results, this article put forward the corresponding proposal from the point of improvingthe efficiency of corporate governance and the quality of CPA Audit.