Deficiencies Of Internal Control,Resignation Of Independent Director,Audit Quality

Recently,the resignation of independent directors is increasing.The past five years,the resignation of independent directors takes place almost daily.However,access to the resignation announcements,In addition to the basic disclosure format content,these independent directors only use simple reasons to respond to the question of the capital market,such as work,physical,personal and other reasons.The real reason for resignation is confidential.In 2008,our country promulgated the "basic norms of internal control",and in 2010 promulgated "supporting guidelines",which means the disclosure of internal control has entered a new stage of development.With the development of internal control system,we can clearly know the governance and internal control of listed companies.Set up an independent directorship is an important way to improve the corporate governance and internal control.Are internal control deficiencies related to the resignation of independent directors?And how the resignations affect the external auditors?The above questions are worth researching.In this paper,the literature and the quantitative and qualitative analysis methods are used.I have collected the 2010-2014 independent directors' resignation announcements of Chinese listed companies by hand,made statistics and analysis of the resignation trends and causes,sorted out the type of resignation and the professional background of independent directors.And I used the CSMAR database and iFind financial database to sort out the internal control deficiencies and the necessary corporate financial data,used the Logistic model to regress the data.All I have done is to provide a reasonable explanation for the unique economic phenomenon of "resignation of independent directors" at the corporate governance level,provide beneficial exploration for Chinese regulators to standardize the independent directors' resignation announcement,protect the large number of minority shareholders.On the basis of previous research,this paper expands the study of the resignation of independent directors,and makes the research more concrete and microscopic.The resignation of independent directors is divided into active and passive resignation,active resignation and then subdivided into financial background and non-financial background,with exploration significance.By controlling the influence of other factors,through regression analysis and robustness test,we get the following conclusions:Independent directors often resign actively because of major defects of the company's internal control system.The defects of governance lead to the increase of independent directors' risk perception.For the sake of maintaining the reputation,the independent directors who do not want to conflict with the company will choose to resign voluntarily,but the warning signals will effect external auditing agencies and auditors,auditors will improve the audit quality by reducing the failure risk of audit,by enlarging the scope of audit,increasing the workload and adopting more prudent audit procedures.The voluntary resignation can effectively convey the signal of internal control,further study found that the professional background of independent directors will affect the effectiveness of the signal transmission,financial background resignation has a better signal effect,can significantly improve the quality of the audit.At the same time,some suggestions on improving the resignation announcement are put forward,such as standardizing disclosure,broadening channels and strengthening communication with auditors.