The Relationship Between Audit Committee Characteristics, Executive Conpensation Incentive And Audit Fees

In recent years, the financial fraud incidents occurred in the domestic and foreignfrequently, reflecting the corporate governance is not perfect. In order to improvethe governance mechanisms of listed company, in2002the Commission StateEconomic and Trade Commission jointly issued the "guidelines" provisions of listedcompany management. The board of directors of a listed company can be set up auditcommittee, independent directors should be accounted for the majority of its members,and enjoy "the proposal to hire or replacement of the external auditinginstitutions" power, since the audit committee system was formally established in ourcountry. The role of audit committee is to supervise the internal auditors’ work, theproposal to hire external auditors and communicate with them. Executivecompensation incentive system of listed company is to solve the agent conflict, themodern enterprise the important measures to promote the healthy development ofenterprises, is also a hot topic in academic circles in recent years has been the concernof. Audit is the company’s external supervisor, provide authentication services to thefinancial statements, to improve the quality of financial statements, as an addedmeasure of corporate governance. In short, the audit committee, executivecompensation incentive and external audit are three important problems in themanagement of the Modern Corporation.This paper first proposes the research background, research significance,research contents and methods and research innovation, and the existing domestic andforeign literature review, analysis and comment; and thenexpatiates the characteristicsof audit committee, executive compensation incentive and audit fees and relatedtheory, the relationship between the three is analyzed; the key part is the empiricalresearch, this paper chooses China’s Shanghai and Shenzhen Stock market A sharesin2009-2012,totally2080data disclosed the characteristics of auditcommittee and executive compensation incentive policies of the listed company asa sample, using correlation analysis and multiple linear regression analysis method toverify the relationship between audit committee characteristics, executivecompensation incentive and audit fees. The empirical study shows, the independence of the audit committee and audit fees are positively correlated, the auditcommittee and audit fees are positively related to the professional but not significant.There was a significant positive correlation between audit committee diligenceand audit fees.The executive compensation incentive contains short-term incentivecompensation and long-term compensation. The short-term compensation and auditfees was a significant positive correlation. While there was a significant negativecorrelating between audit fees and long-term compensation. Finally, according to theempirical results, combined with the actual situation in China, this paper puts forwardrelevant policy suggestions to improve the executive compensation incentive system,audit committee system of Chinese.