The Impact Of Ultimate Ownership Structure On Auditer Choices

To promote Chinese economic and social development,the demand for deep reform of the capital market is in a hurry. As an efficient oversight mechanism for market,external audit quality matters.In spite of improving account firms’s own standyard,bringing up a high quality need is also an efficient solution.In modern enterprises,highly control stays as a familiar situation,and ultimate ownership structure plays as a dominate model.Meaningwhile,most literatures confirm plays a important role in affecting audit quality and leading auditor choice.So how does ultimate ownership structure affects auditor choices become a central issue for both relavant supervision departments and enterprises.We explore the relationship between ultimate ownership structure and auditor choice from two aspects of theory and empirical study.In theroretical part, we choose Ernst & Young,PricewaterhouseCoopers,Deloitte andKPMG as representatives of high quality auditors,distinguished from other accounting firms in the audit market. With the help from former related records on shareholding structure and corporate governance,we discuss how ultimate control rights and cash flow rights influence auditor choice.Also,we make deduction to machanisms that how the separation of two rights and the nature of the ultimate controller impact on auditor choice.In empirical part,we use China A share listed companies’2008 to 2013 data(6432 observed values) as sample,and control on enterprise’s management and features.5 models are built with Logisic regression.And the outcome testify that significant relationship exists.Concrete summaries are as follows:(1 Relationship between ultimate control right and auditor choice is an inverted "U"model. (2)Relationship between cash flow right and auditor choice is an inverted "U’model. It share the same reason with (1). (3)Within the ultimate ownership strucrure,the increase of separating extent of ownership and controlling right means improvement of the second-type agency costs and corporation financial risk.With conclusions above,we give advices in improving corporate governance,boosting audit quality and promoting development of capital market.Also,we put forward some more research directions for reference.