Research On Stock Ownership Structure, Audit Quality And The Escalating Commitment

With China’s economic growth,investment became one of the active factors.An effective preconditionwhich play a role in boosting the investment. In recent years, China’s investment maintain high growth, butbehind it there is a serious inefficiencies, escalation of behavior is widespread. By the presence of absenceof property rights, government intervention and a serious lack of motivation and other issues, enterprises’investment behavior more often reflect social and political goals, deviated from the enterprise valuemaximization, this phenomenon is more particularly in Chinese state-owned enterprises. Although sincethe1990s, a series of property rights system reform has been done, the reform of state-owned enterprisesshowed no synchronization economic and political institutional, corporate ownership structure is irrational,accounting information distortion problem is still widespread. So, in this context, escalating behavior ofenterprises is common.Corporate governance mechanisms on behalf of the ownership structure is an important factoraffecting the internal corporate investment behavior, and audit quality can have an impact on corporategovernance from the outside. This will combine the impact of escalating acts of corporate internal andexternal factors to the principal-agent theory, corporate governance theory as the theoretical support anddraw on relevant research methods at home and abroad, based on the background of our country, westudied how the unique ownership structure and audit quality influence the behavior of capital, hoping toprovide more empirical evidence for the investment behavior of listed companies in China.In this paper, empirical studies show that:1, ownership concentration and Escalation inverted U relationship. And when the largest shareholderholding shares or State-owned shares, the effect of concentration of ownership of the escalation of themore obvious.2, equity restriction on the escalation of a certain extent. And, when the largest shareholder holdingshares of state-owned shares or national governance role is obvious.3, audit quality corporate governance role with Escalation. The higher audit quality, the lower thelevel of capital and the possibility of malignancy occurred. This effect in the case of state-owned sharesheld by the largest shareholder or national stocks, more significant.4, when the first state-owned shares held by major shareholders or state-owned shares, theshareholding structure of governance and the role of audit quality Escalation complementary. When thelargest shareholder holds shares or non-state-owned shares, the shareholding structure of governance andthe role of audit quality Escalation of alternative relationships.Through research, obtained ownership concentration, the nature of the largest shareholder equity,equity restriction, managerial ownership and equity incentives can have an impact on the enterprise fromescalating, and higher audit quality will inhibit escalation occurs. Therefore, we propose to improve oureconomy, legal system and audit system, to reduce the proportion of state-owned shares, the effectiveimplementation of equity incentive, making our business more rationalized ownership structure, moreaccurate accounting information and so on as policy recommendations.