Research On Correlation Between Corporate Governance And Audit Fee

Audit is an important economic supervising mechanisms and its ultimate objective is providing relevant and reliable information to shareholders to reduce the level of information asymmetry among company operators, investors and other stakeholders. Audit generates on the basis of fiduciary economic responsibility and it is a control mechanism to make sure this relationship runs effectively; The objective of corporate governance is to keep the fiduciary economic relationship run smoothly through a series of laws, culture and institution. In2001, the Chinese listed companies are firstly required to disclose audit fees which not only provided the necessary conditions for the public to acquire and compare audit services price information, but also offer the academic research basis for audits quality, audit independence and audit fees. With the development of joint-stock company and the wide application of corporate governance theory, people gradually divert attention to the study of correlations between corporate governance and audit fees.This paper reviews the research literatures related to audit fee influencing factors and correlative between corporate governance and audit fees both from domestic and overseas. On the basis of exploring theoretical roots of corporate governance and audit fees, the paper select company data of2009-2011from Shanghai and Shenzhen A share market which disclose audit fees and build a multiple linear regression model. We implement descriptive analysis, correlation analysis, multiple linear regression analysis and the sub-sample model regression analysis for the controlling shareholder influence factors.According to the theoretical analysis and empirical test, this paper reach following conclusions:there is a strong correlation between the internal corporate governance structure and audit fees. Listed companies can reduce the audit cost by improving corporate governance structure and CPA can measure their potential risks by observing customers corporate governance structure characteristics to fix audit price more scientific and reasonably. Meanwhile, this paper propose some recommendations including improving corporate governance structure and build a good atmosphere for the audit market to point out the direction for the long-term healthy development of Chinese capital market and the audit market.