Control Of The Arrangements, The Accounting Firm Audit Selection And Pricing

The reason for the existence of the enterprise is to reduce transaction costs, andwith the development of market economy, the separation of corporate ownership andmanagement rights leads to the principal-agent problems,in order to alleviate agencyconflict and reduce the agency cost, independent audit, as a kind of effectivesupervision mechanism, arises at the historic moment,and its economic value is toimprove the quality of accounting information in capital market report, to reduce theagency cost of the enterprise and the risk of information in the capital market, andreduce the cost of capital, improve the efficiency of resource allocation.Legalenvironment is weak in our country, has formed a highly concentrated ownershipstructure to protect the interests of shareholders, under this kind of ownershipstructure, controlling shareholders of listed companies achieve its control through thestaff, there are double agent conflict. Under this kind of ownership structure, researchthe microscopic behavior of listed companies in our country, must consider thearrangement of control and double agency problem in the enterprise.With a sample of A-share listed corporations from2007to2012, thisdissertation develops the following three issues from perspective of the company’sultimate control,which potentially affect the strategies of the company:(1) How doesthe control arrangement affect the company to choose accounting firms?(2) Whetherthe control of general manager affect the choice of accounting firms, and then affectthe audit pricing?(3) What is the the relations among control arrangement, choice ofaccounting firms and audit pricing of the relations, Whether the big accounting firmsact as a signalling role, the audit fee is there a reputation premium?This dissertation finds that:(1) the ultimate control of listed companies and theirfinancial condition affect the choice of the accounting firm;(2) control of generalmanager not significantly affects the choice of the accounting firm, which onlysignificantly affects audit pricing in the non-profit enterprise;(3) the accounting firmshave strong voice in the audit pricing, significantly influence the audit fee, and there is reputation premium among the big accounting firms;(4) the state-ownedequity is negatively related to the audit fee, the ultimate control of listed companiesinconsistently impact on audit fees in each sample: Ownership concentration andaudit fees are inverted n-type relationship or negative linear correlation in thestate-owned business sample; Ownership concentration and audit fees are invertedu-shaped relationship or negative linear correlation in the state-owned no-profitsample; Ownership concentration not obviously influence audit fees inNon-state-owned samples.(5) the for-profit enterprises are more adept at using theequity incentive to relief agency conflict, the coefficient between managementownership and the management fee is significant.The innovations and contributions of this dissertation mainly lie in its methodand conclusions.On research questions and conclusion, this dissertation put forward that under theequity ownership structure in China, study about the choice of accounting firm andaudit fees should consider the characteristics of ultimate control, the control ofgeneral manager and the company’s financial restriction factors to establish models,from the perspective of the ultimate control,which potentially effect the companydecision,and expanded the dimension of control analysis. The proportion of ultimatecontrol and the choice of accounting firms and audit fee, increase the square and cubicterm of the proportion of ultimate control in the model to verify whether relationshipbetween the proportion of control and audit fees is a u-shaped relationship or N typerelationship, which make up for the deficiency in the past research,the relationshipbetween the two limited to a simple linear relationship.This dissertation find that,thestate-owned equity is negatively related to the audit fee, the ultimate control of listedcompanies inconsistently impact on audit fees in each sample，which enlightens usthat, in the process of property rights reform, to different types of companies,weshould different take different measures and policies adjusting measures to the localconditions and suiting the remedy to the case.On methodology, this paper adopts Logistic regression, the ordinary least squaresregression and two-stage least squares regression, and empirically tested comprehensive influence of various factors on the choice behavior of the accountingfirm and audit fees, systematically analyzed the main determinants of accountingfirm’s choice and audit fees, which made up for past research, ignoring thecharacteristics of ultimate control, the control of general manager and the company’sfinancial constraints, to make the research conclusion more persuasive, and has acertain academic value.