Study On The Relationship Between Audit Committee Independence And Audit Quality

With the development of economy and society, increasing the organization’s hierarchy, authority managers also expanding the company’s business more complicated. Nature behind a proxy chain extends outward and staggered overlap, making information asymmetry growing. Corporate governance issues which caused frequent, occur more Enron is pushing this issue to the top. How to solve the problem of corporate governance has become the focus needs to explore issues. Audit Committee since its inception, is considered a good way to solve the ills of corporate governance. Its essence is to seek independent financial oversight of a force in the company’s management board to conduct rigorous and objective monitoring of the formal introduction in2002of the regime.At present, China’s capital market access threshold rising, delisting system gradually established and continue to strengthen the regulatory regime, particularly in2013promulgated the "New Ten", making China’s capital market has entered a rapid development track. There is no doubt that the healthy development of China’s economy directly affected the capital market. In order to better promote the healthy development of China’s capital market to better address corporate governance issues, to carry out the study of the Audit Committee is particularly important. In numerous studies, the independence of the audit committee has been regarded as the existence of the soul. Lack of independence of the audit committee will be the lack of an accurate grasp of the company’s financial strategic direction of the Company’s Annual Report will be the lack of objective judgment, will the lack of effective protection of internal and external audits, and ultimately makes the decline in audit quality which directly harm the interests of the market. In order to avoid the audit committee system a mere formality, and eventually became a puppet manipulated by management, the best way is to strengthen the independence requirements through the regulatory system.In this paper, through a combination of theoretical and experimental approach to the audit committee independence and audit quality were discussed, hope through research and the optimal ratio of independence, making the audit committee to improve audit quality to play a full role. Firstly, a review of the existing literature on methods to summarize the relevant independence, pointing out deficiencies in the existing literature. Then, through the theoretical analysis, combined with China’s current situation, put forward two basic assumptions:the size of the audit committee and audit quality exists a positive correlation between independence and audit quality and audit committee related, but the symbol is undefined. When the data of2012were tested and found two assumptions are not true. In the subsequent further experiments, the paper size and more detailed areas of independence, found that when the scale is7and the independence of the ratio of2/3, assuming one and two were established. The results presented in this article in accordance with the audit committee should be established to2/3ratio is based on conditional listed company shall establish a large-scale (7-a-side), and a high proportion (only one non-independent directors). Finally, this paper points out the limitations of existing research and future direction in depth research. Based on previous studies, the potential impact of the independence of the dig, do not rush to give general conclusions, but through careful play area proportion and number of independent committee to explore the validity of the scale. To some extent, enriching the study of the independence of audit committees and the development of relevant policy committee to provide evidence for the regulatory agencies.