An Empirical Study On The Influence Of Equity Incentive On The Demand For High-quality External Audit

With the separation of ownership and management,the agency conflict between owners and managers has aroused the attention of the theorists and practitioners.In order to make the modern enterprise system run effectively,it is necessary to carry out effective incentive and restraint measures,which caused the development of equity incentive and external audit.Our country began to standardize the equity incentive plan for managers in 2006.Since then,more and more listed companies have begun to adopt equity incentive into the compensation system.At the same time,with the sound laws and regulation being carried out and the entering of foreign capital,the audit firm in China could provide high quality audit services,the demand for high quality audit services in capital market has been appeared.The intensity of demand is related to the agency conflict of the company.That is to say,whether the equity incentive mechanism or the external audit mechanism are both arise to alleviate the agency problem.We cannot help but wonder whether the implementation of equity incentive will reduce the demand for high quality audit in the terms of cost savings.Specifically,it is necessary for us to study whether the equity incentive can reduce the agency problem,and thus reduce the demand of the external audit.China's equity incentive plan has a system characteristic,that is,there is a clear legal provisions regulate that executive stock incentive vest of the listed companies must be based on performance of the companies.We want to study on whether different equity incentive schemes resort to different vest conditions will have different impact on the audit demand.These two issues constitute the two major research topics of this paper.The specific research layout is as follows.The research of this paper is carried out according to the following six parts.The first part is introduction.This part briefly introduces the background and significance of this topic,outlines the research framework,research methods and innovations of this paper.The second part is literature review.Sort out the relevant research at home and abroad and the process in this field.Provide theoretical and empirical support for the research topic of this paper,and put forward the research ideas of this paper.The third part is theoretical analysis and hypothesis.This paper introduces the concept and related theories of equity incentive and audit requirements,through theoretical analysis and reference to previous research results,we deduced the four hypotheses.The fourth part is research design.According to the hypothesis,determine the research samples and data sources.The appropriate research variables are selected,and design the research model.The fifth part is empirical test.Through descriptive statistics,correlation analysis,regression analysis and the robustness test to verify our hypotheses.The sixth part is conclusion and suggestion.Summarize the overall research of this paper,put forward some related suggestions,and point out the limitations and deficiencies of this paper.Through the comparison of audit requirements between the company implemented equity incentive and company without equity incentive of 2009-2014,found that equity incentive can decrease the audit demand of listed companies;Manually collecting the vesting conditions of managers' equity incentive plan published in the 2009-2014 years,showed a significant negative correlation between equity incentive vesting conditions and auditing demand,and the negative correlation will be weakened in state-owned enterprises and in the company that the chairman and general manager are the same person.The main innovation of this paper are as follows,enriching the related literature of equity incentive economic consequences and audit demand;Paying attention to the vesting conditions of performance,and the nature of property rights and a CEO-chairman play a what role between them.