The Association Between Accounting Firm Internal Governance Structure And Audit Quality

Audit firm internal governance structure is a set of comprehensive institutional arrangements for firm. Good audit firm internal governance structure can be mutual supervision and the right balance between the various stakeholders, have more robust internal decision-making mechanism, have more reasonable the major decisions about the firm, have more effective risk management mechanisms and quality control mechanisms, can effectively circumvent the various business risks, curb audit failure from the source and the fundamental and improve audit firm audit quality.In this thesis, Economics Principal-agent Theory, Incomplete Contract Theory, Management Science Modern stewardship Theory and Law Legal Perspective are ours theoretical basis. We use the data of our country2010-2012Shanghai A-share companies and their annual audit firm for the study to test the association between the four variables of audit firm internal governance structure and audit firm audit quality. We find that the audit firm internal governance structure does affect the quality. Specifically performance is as follows: organizational forms for partnership audit firm, the lower the proportion of shareholding chief accountant, the more the number of meetings held by the Board of Directors, audit quality is higher; the association between firm the largest shareholder stake and audit quality is inverted "U" shaped; the relationship between the quantity of committees under the Board or the meeting number of Board of Supervisors and audit quality are not significant statistically; the country than the international "big4" audit firm good internal governance structure enhance audit quality; firm sound internal governance structure in the audit of the private enterprises audit client can improve audit quality. Finally, we propose the following recommendations: improved organizational forms of audit firm; optimize the equity structure; specific firm specialized committees under the Board and the Board of Supervisors office needs to be further improved play their role.