Managerial Power And Accounting Firm Selecting: Evidence From The Securities Market In China

The separation of ownership and operational rights lays the foundation for the development of modern joint-stock company(Berle and Means,1932),but at the same time,it has formed two different interest groups of shareholders and managers,which has led to the agency problem.(Jensen,M.and W.Meckling,1976).In the process of the reform of sate-owned enterprises and enterprise system,we find thepower of enterprise manage layer is constantly strengthened,which leads to a series of agency problems,such as the expansion of Managerial power and the imbalance of power and responsibility.According to the modern corporation's financial theory,information asymmetry and incentive problem are the root cause of the agency conflict.In order to alleviate the agency conflicts and reduce agency costs,it is very important to encourage and restrain the behavior of management personnel by means of the internal governance mechanism.However,China is currently in the stage of institutional transition,and its institutional environment has inherent defects,laws and regulations which are not perfect.In addition,The effect of corporate governance is not satisfactory.The issue of "insider control" derived from this internal and external environment makes it possible for managers to override the corporate governance mechanism.Under the realistic condition,corporate governance layer has the motivation to restrain excessive expansion of the management authority by the appointment of high quality external audit.In recent years,with the reform of state enterprises in an all-round way,The type of actual controller in an enterprise has received increasing attention.From the existing literature,Research on the actual controller is more focused on corporate performance,risk strategy,and agency cost,However,Until now few people have studied the following questions,For example,The relationship between the actual controller and the choice of the accounting firm,Whether the influence of the management authority and the actual controller on the choice of the accounting firm are compatible,the management authority and the actual controller in the selection of high quality accounting firms are prone to cooperate or contain each other,These questions need to be deeply discussed and answered.The thesis mainly refers to the mainstream literature to measure the management's power,ultimate controlling owners and the type of accounting firms.The processing technique has been carried out basing on the relevant theories and researches.Through empirical test on the economic examination index,this paper analyzes the accounting firm selecting and the impact of ultimate controlling owners on it from the standpoint of management's power.On this basis,it deeply discusses about the interaction between them and further studies whether the management's power or the ultimate controlling owners have an impact on the accounting firm selecting.This thesis want to investigate the relevant empirical evidence about the factors of selecting accounting firms,so as to provide a theoretical basis and recommendations on selection of accounting firms for the corporate management and governance layer,a reference for the accounting firm when considering whether accept customers or not,a basis for investment decisions of investors.This thesis is divided into six parts and each chapter is arranged as following:The first chapter is Introduction.This section describes the major research background and significance,roughly describes the research idea and methods of the article,simultaneously summarizes the contents and the framework of this paper.The second part of this article is literature review.Firstly,the paper summarizes and analyses the literature of management rights and accounting firms selection respectively.Then it further summarizes the literature of the relationship between management rights and accounting firms,and introduces the influence of actual controllers to make a comprehensive analysis.Finally,the paper lead to study based on the evaluation of those literature.The third part of this article is the theory foundation of management rights and accounting firms selection.This part is centrally concerned with definition of the concept about management rights and accounting firms selecting,analysis of the relationship and theoretical basis.The forth part of this article is theory analysis and research design.On the basis of the Principal-agent theory,information asymmetry theory and Stewardship theory,the author analyses how the Managerial power and actual controller make effect on the choices of accounting firms in the current system environment of our country.On this basis,the author sets up the research hypothesis and the research model basing on the account of former scholars' research.The fifth part is the empirical test of the relationship among the power of management,actual controller and the choices of accounting firms.On the basis of the research hypothesis and research model,we collect the data from 2007 to 2013 of listed companies and deal with it,then explain all sorts of variables.Firstly we use the descriptive statistics and correlation analysis methods to know the impact of the different levels of power of management authority on the choice of accounting firm.Then applying the multiple regression to proving the hypothesis is true or not.Finally,what we should do is further test and robust test.The sixth part is the conclusions and policy suggestion.On the basis of the positive analysis,we sum up its conclusion and come up with some advises about the influence on Corporate governance mechanism of the enterprise and the accounting firm selecting.In addition,we analyses the limitations in the paper and the development of the further research.The main conclusion of this paper:This paper did statistical quantitative analysis with the sample of A-share public companies from 2007-2013 in our country,it empirically testes the relationship between the management rights and the accounting firm selecting,and the interaction between the management rights and the actual controller choosing accounting firms.According to the researching report the greater the Managerial power,the corporate governance represented by the general meeting of stockholders and board of directors are more likely to employ large accounting firms,in order to restrain the Managerial power's expansion or the power rent-seeking behavior;Further research shows that the actual controller and the Managerial power impact on the accounting firm selecting,and the Managerial power playing a dominant role.So the relationship between Managerial power and the choice of the accounting firms is more significant in the state-owned enterprises.