Audit Committee’s Compensation And Its Regulatory Effectiveness

In recent years, financial fraud have occurred, the effectiveness of corporate governance also receive more attention from researchers. The Audit Committee, as one of corporate governance mechanism, and its effectiveness has become a focus of research. However, most of the current domestic and foreign scholars dedicated the impact of audit committee’s independence and professionalism on its effectiveness, the Audit Committee’s compensation research has to be increased. Therefore, this paper takes Shanghai A-share listed companies from 2010 to 2014 as a sample of data, from the perspective of earnings management, and examined the remuneration of the Audit Committee and its regulation relations effectiveness from the he accrued earnings management and lower real earnings management measurement model.This paper is divided into six chapters. The first chapter is an introduction; The second chapter is literature review, and it summarizes the characteristics of audit committee at home and abroad, the effectiveness of the Audit Committee and the Audit Committee Remuneration, and further pointed out the problems at home and abroad study; The third chapter is the theoretical basis, including basic concepts and theories; the fourth chapter is the study design, including sample selection and data sources, variable definitions and model building; The fifth chapter is the empirical analysis, including descriptive statistics and multiple regression analysis. Finally, the chaper includes conclusions, recommendations, and the limitations of this study.The main conclusions obtained in this paper include:1. In either measurement mode, The salary level of the audit committee and the effectiveness of its regulation presents inverted U type relationship. That is, in a certain pay level, the regulatory effectiveness of the audit committee will be enhanced with the increase of salaries, but when it exceeds this level, pay levels will lead to earnings manipulation. This shows that the efficiency of supervision of the Audit Committee in declining2.Audit Committee’s size, independence and professionalism are positively correlated with its regulatory effectiveness, This shows that the larger the size, the stronger the independence, the higher members of the Audit Committee of the professional level, the stronger its regulatory effectiveness.Through this study, on the one hand, we are hoping to understand the effectiveness of the audit committee function to play to help improve the internal governance of the company, to protect the independence of the external audit institutions and to improve the quality of financial reporting information, then help investment makers to better understand the real situation of enterprises.