A Study On The Relationship Between Independent Audit And Corporate Governance Efficiency

Independent audit produced in two rights separation conditions to improve the information asymmetry between owners and operators, thus improve the company’s internal governance efficiency. With the expansion of enterprises, the management of complication and the diversification of financing channels, the degree of agency conflicts and information asymmetry lead by two rights separation are deeper and deeper, yet the impact internal governance has on improving this situation is often limited, thus independent audit as an external governance mechanism to supplement is more needed. In the emerging capital market like our country, the high ownership concentration and dominance of state-owned shares is a common feature of listed companies. The high ownership concentration produces the agency conflicts between major shareholders and other medium and small shareholders, the performance of which is that major shareholders infringe on the interests of other shareholders in China’s capital market to cause great loss and severely disrupt the order of capital market, and finally restrict the healthy development of the economy. So the conflicts between major and other medium and small shareholders should be a variable that isn’t allowed to ignore when studying issues about corporate governance.According to the characteristics of the capital market in China, what kind of impact does corporate governance efficiency have on independent audit? And has independent audit played a proper role in easing the conflicts between major and other medium and small shareholders and improving the efficiency of corporate governance since it was implemented a few years ago? Previous studies mostly from the aspect of audit requirements prove the independent audit’s effect on corporate governance, which is a single research perspective. In this paper, by adopting both theoretical research and empirical research methods, ROE and major shareholders fund occupation are both used to describe governance efficiency, respectively from the aspect of governance gains and governance costs, then the research will be conducted in two aspectsIn the first research, the two indicators of corporate governance efficiency are as explaining variables, with respectively audit opinion and auditor type being used as explained variables, which studies the influence of the efficiency of corporate governance on audit opinion and whether there is a high quality audit requirements; in the second research, last year’s auditor opinion and auditor type are as explaining variables, with respectively the changes of major and other shareholders’agency conflicts and corporate governance benefits between this year and last year being used as explained variables, which studies whether the result of independent audit is gotten a positive reaction to promote the efficiency of corporate governance. Both of the two aspects studies have reached the following conclusions:firstly, the conflicts between major and other medium and small shareholders really is an important factor influencing corporate governance efficiency; secondly, although there are a lot of problems need to be improved in audit market in China and independent audit is often not so independent, it is undeniable that in the long term independent audit remains playing a certain positive role in improving the efficiency of corporate governance and capital market; thirdly, independent audit needs good internal governance mechanism as the foundation to take effect.