| With the development of the capital market and the socio-economic, there was separation between corporate ownership and operation, the separation causes essential agency problems and asymmetric information problems between business owners and operators. Audit as an independent external oversight mechanisms, it can be able to effectively alleviate the agency conflict and the problem of information asymmetry. So. audit is playing an increasingly important role in the present socio-economic.Investment opportunity is a comprehensive reflection of the future development capacity of the company. The concept of investment opportunity was first proposed by Miller and Modigliani, two famous American scholars. They think that the enterprise value is the existing operating assets in the future sustainable development of the value generated, and the value of future investment NPV is positive investment projects. The latter value is the value of the investment opportunity. In the1960s, Myers advanced the theory of investment opportunity, he thought investment opportunity is a growth option, this option relys on their subjective judgments by their managers choose to adopt or to abandon, enterprise value brought by this growth options is the investment opportunity, is also an important part of the enterprise value. He is also the first person who linked the investment opportunity to external independent audit. He started analyzing from the influencing factors of external audit. He believed that investment opportunity is an important part of enterprise value, as opposed, for an enterprise value of another part of the company’s existing assets, the value of investment opportunity is largely dependent on the subjective judgment of business managers. Especially for the companies with high investment opportunities, there are many factors that affect business investment opportunities (such as policies and regulations, the external environment. R&D expenditures, purchase expenses, etc.).the faster changes of the company development and external environment, the more transactions requires management rely on their own subjective judgment, it gives more chances for company managers earnings management t, and so the value of the investment opportunities will be influenced by the subjective judgment of the management staff. Companies with higher investment opportunities, there is a large gap between business owners and managers in the understanding of information on investment opportunities, and the behavior of the managers is more difficult to monitor, which exacerbated the information asymmetry and agency conflicts between company’s owners and operators.In the existing literature, are mainly linked the investment opportunities to the company’s financial policy and capital structure. There are less literature which link the investment opportunity to the audit quality and audit fees. This article is mainly research the different quality of the audit with different investment opportunities, as well as the audit fees, to show that relations between the investment opportunities and audit quality, audit fees.Using the concept of investment opportunity as the starting point, contact the corporate investment opportunities and the quality of auditing, audit fees closely, study the degree of influence of audit quality, audit fees by the investment opportunities. There are few of the existing literatures about research on investment opportunities and its auditing relationship, we choose China in Shanghai and Shenzhen-listed A-share companies from2009to2011, the company’s financial data, through regression analysis, data filtering, construct two regression models to test the impact of investment opportunities in audit quality and in audit fees.The regression results of the first model:There is a significant positive correlation between investment opportunity and audit quality; That is the higher the investment opportunities, the higher the quality of audit. Second model, the study found that higher investment opportunities is, the higher audit fees.This study is composed of six parts, the first part is an introduction, the second part is the literature review, the third part is the theoretical analysis, the fourth part is the research of the Investment opportunity on audit quality. The fifth part of the literature is the research of the Investment opportunity on audit fees. The sixth part is the contributions and inadequate of the literature. Six parts as follows:Chapter1,Introduction, This chapter describes the significance of this research, the research background, research ideas and research methods, the framework of this study, it is an overall planning articles.Chapter2.Literature Review. This chapter summarizes relevant literature and existing research results. around the measure of investment opportunities, the relationship among investment opportunities, audit quality and audit fees.Based on the review, summarize the insignificance of the exiting research in our country-.Chapter3,The theoretical analysis. In this chapter, first., elaborate the basic theory of audit. Second, elaborate the concepts of investment opportunities, audit quality and audit fees, from the theoretical analysis of enterprise investment opportunities for audit quality and audit fees. Third, put forward the views expressed in this paper.Chapter4, The research of the Investment opportunity on audit quality. This chapter including the assumption proposed, model set. analysis of regression results, and Robustness test. First, according to the previous theoretical basis, set the hypothesis:High level of investment opportunities also have a higher audit quality. That means the company with high investment opportunities are more inclined to hire large、reputed CPA. The company’s level of investment opportunities and Audit Quality positively correlated.2, Sample selection and data sources.3,2009-2011company listed on the Shanghai and Shenzhen A-share as the object of study, excluding missing values and extreme values, build regression models and multiple regression analysis, get the results of the analysis.Chapter5, The research of investment opportunities in audit fees. According to the former article, first proposing the hypothesis:The higher investment opportunities of company, the higher audit fees. And then build the regression model, empirical test of the2009-2011China’s Shanghai and Shenzhen A-share listed company data, study the influence of investment opportunities in audit fees.Chapter6, Study limitations and deficiencies summarizes the limitations and shortcomings of this researchThrough the inspection of the relevant data, the following conclusions:(1) Showing a significant positive correlation between investment opportunities and the quality of auditing. That higher corporate investment opportunities, the higher the quality of audits. This result suggests that due to the rapid development and rapid changes in the environment.the company with high investment opportunities requires management to rely on the subjective judgment matters more。The agency conflicts and asymmetric information problem between shareholders and corporate managers is relatively large, therefore the shareholders prevent their own interests will not be harmed, expecting to hire high-quality accounting firm to audit the company to improve the audit quality, inhibition of management "opportunistic behavior".(2) Showed a significant positive correlation between corporate investment opportunities and audit fees. That higher corporate investment opportunities, the higher the cost of the audit. This shows that the investment opportunities of the company also had a significant impact on audit fees. Former studies have shown that the greater business investment opportunities are, the higher audit risk is. This is because of the high investment opportunities always with the rapid development of uncertainty matters, business managers are more relied on subjective judgment matters, so there will be higher audit risk and control risk. Accounting firm audits this company need the auditor’s professional competence requirements higher, accounting firms need to invest more time and manpower, So it is expected that the auditor will charge a higher fee to recover their costs and expenditures. In addition, due to the companies with the high investment opportunities generally have weaker internal control, auditors face the check risk and internal control risk, so they will be required to obtain a higher return. So Investment opportunities will impact audit fees.The contribution of this paper:(1) In the academic sense, the research about investment opportunities always linking the investment opportunities to the company’s financial policy, dividend policy combined, but combining investment opportunities with the audit literature less. This article hopes on the basis of the existing literature, research the relationship among investment opportunities, audit quality and audit fees. Analyzing the influences of investment opportunities on audit quality, audit fees. The empirical study provides more theoretical support, linked investment opportunities and its auditing problem more closely, enrich theoretical research in this regard.(2) Practical significance, it is the purpose of the auditor to select customers with high investment opportunities facing greater audit risk, the auditors need to invest manpower and knowledge, but they can charge higher fees to recover expenditures and provide a higher audit quality report; For customers, companies with high investment opportunities in order to avoid the opportunistic behavior of managers, they should be chosen a higher quality of audit firm to audit, This will help to curb management’s opportunistic behavior.Inadequate:(1)The sample of this study is limited to2009-2011in Shanghai and Shenzhen A-share listed companies, the time span is limited, and many foreign literature selected ten years or even decades samples for research. Therefore, in future research, make the research time extension and expansion of the number of samples, to explore investment opportunities in audit quality and audit fees.(2)Some of the symbols of the variable in the regression of the model significantly problems can not be explained. The variable of Ldebtat, capint, is interpreted the variable audit quality opposite sign, find relevant literature still can not explain, I hope to be able to solve this problem in the future.(3) The object of this paper is limited to the A-share listed companies, and lack of the investment opportunities in other types of domestic enterprises, in the hope that in future research to make research for investment opportunities in other types of enterprises in audit quality and audit fees. |
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