Study Of Audit Committee Establishment Impact On Audit Quality

Since the 21st century, Audit failure cases sweep the entire world. Lv Dadi, Wan Fu sheng ke and other financial fraud cases in China have brought a great shock to the capital markets, while a large number of investors suffered incalculable losses. All sectors of society query independent audit quality after a series of audit failure cases. Regulators paid attention to the corporate governance mechanisms to improve the quality of audit, by setting up the audit committee as a corporate sector. However, is it true that an audit committee can improve audit quality? In the paper, this problem is the breakthrough point for research.The audit committee of listed company is the main line. This paper studies whether the audit committee established to improve quality or not. Then, this paper use the four major international accounting firms hired by listed company as substitution variables of audit quality, select the size of the audit committee, proportion of independent directors, the proportion of financial professionals, whether the head is a financial expert, whether the head is a certified public accountant or not. This paper explores the influence of audit committee construction to the audit quality, by discussing the factors of the listed company whether to employ the influence of the big four. Based on 705 listed companies from the stock exchange of Shanghai and Shenzhen in 2012 as research samples, this paper designs a model research. Empirical study results show that expanding the scale of the audit committee and enhancing the independence of the audit committee help to improve audit quality. There is no significant positive relationship between the independent audit quality and the proportion of audit committee financial professionals. The same is true between head for financial experts and the independent audit quality. There is no significant negative correlation between the audit quality and whether the director of the audit committee has a public accountant certificate. Control variables, which are flow rate, earnings per share, ownership concentration can significantly affect audit quality. According to the empirical results, this paper analyze and put forward 3 aspects of corresponding recommendations and make another 2 aspects of the audit committee system improvement initiatives combined with China’s current status of the audit committee and data collection, hoping to enhance the effectiveness of audit committee, and to improve the audit quality. At the end of the article, the shortage of the paper and future research direction are pointed out.