The Research On The Influence On The CPA Service Demand By Stock Ownership Structure

After the Ownership Reform, tremendous changes have taken place in the capital market of China, especially in stock ownership structure. The change affects the demand for CPA services. From the perspective of CPA industry, this paper is conducted to study the influence on the whole demand for CPA service by stock ownership structure, as well as the influence on both audit and non-audit demand by stock ownership structure.This study is based on three theories, namely the agent theory among the stock holders, the game theory of the institutional economics and the investor protection theory. In quality dimension and quantity dimension, this paper uses the character of the firm, the equity degree of balance and the separation degree between the control rights and cash flow rights to describe the stock ownership structure. Then the paper studies the influence by the three variables on the demand for CPA service using the logical regression with data collected to progress the empirical research. And the data is from the listed companies of Shenzhen Stock Exchange and Shanghai Stock Exchange from 2006 to 2014.This paper gets conclusions as follows. Firstly, state-owned business has higher level demand for CPA service than other firms. In detail, state-owned business has higher level demand for both CPA audit service and non-audit service. The reason might be that the management of state-owned business becomes more normative and the supervision becomes more rigorous. Secondly, the bigger the equity degree of balance is, the higher level demand of CPA service is shown. Exactly, as for the demand for audit service, the bigger the equity degree of balance is, the higher level demand of audit service is shown, because other shareholders can influence the important decisions of the firm. As for the demand of non-audit service, however, there is no significant influence by the equity degree of balance, because the other shareholder may not have enough control rights to decide whether the company needs more non-audit service. At last, the results show that the bigger the separation degree, the lower level demand of CPA service is shown. Exactly, the result of the demand for both audit service and non-audit service are the same as the demand for the whole service provided by CPA. The reason is that controllers with high separation degree tend to control the company to gain more benefit for themselves.This paper is consisted with six parts. The first part is introduction. This part introduced background, research significance and the method used in this paper. The second part is the literature review. In this part, recent research on the stock ownership structure and the demand for CPA service is described. The third part is the theoretical analysis and the hypotheses. By analyzing the three theories: the agent theory, the game theory of the institutional economics and the investor protection theory, three main hypotheses were proposed from three aspects: the character of the firm, the equity degree of balance and the separation degree between the control and cash flow rights. The forth part is the research design using the logical regression with data collected to progress the empirical research. The fifth part is the analysis of the empirical results. The last part is the conclusions of the whole research.