Audit Committee Characteristics?Financing Requirements And Auditor Choice

High quality auditors can identify managerial fraud and it can identify other speculative behavior,also it can inhibit the level of earnings management.Hence it is an effective mechanism to increase corporate governance and improve the quality of financial reporting.The auditing market in China is still buyer-oriented,so listed companies have the discretion of the quality of auditors.It receives different levels of audit quality by selecting different quality external audits.Promote listed companies to choose high-quality auditors is to improve the quality of financial statements have a section,and proposing to hire or replace an external auditor is one of the most important duties for the auditing committee.An auditing committee that is more effective will choose external auditing with better quality.The choice of auditors will be influenced by the effectiveness of the audit committee,and the more effective the audit committee should promote the company to choose higher quality auditors to improve the quality of financial statements.According to the high-level theory,the demographic characteristics of the audit committee can effectively explain the effectiveness of the audit committee.So what are the characteristics of the audit committee to improve listed companies to choose high-quality auditors? Or what is the relationship between the characteristics of the audit committee and the choice of auditors of listed companies?Based on the above argument,this paper selects the 2011-2015 data from publicly listed firms with available auditing committee characteristics.A total of 8663 observations were obtained.Using empirical analysis techniques such as OLS and logistic multi-variant regressions,this paper studies what types of auditing committee are more effective from four perspectives: level of professionalism,level of independence,age,and size.This study aims to help publicly listed firms to improve their chances to receive high quality auditing.At the same time,financing requirements will induce firms to manipulate profit,which high quality auditor will not tolerate.Therefore,this paper further discusses the effectiveness of auditing committee when firms require different financing and still promote firms to choose high quality auditing services.Finally,this paper examines the relationship between high-quality auditors and the quality of financial statements with earnings management as the proxy variable,to reinforce the logical starting point of this theory.The main points of this paper's conclusion are:(1)The audit committee's independence characteristics,professional characteristics,age characteristics and size characteristics are significantly positively correlated with the selection of high quality auditors.That is to say the stronger the independence,the stronger the professionalism,the older the average age and the greater the effectiveness of the larger audit committee,the more able to promote the selection of high-quality auditors.(2)In the case of high financing needs,the audit committee's independence characteristics,professional characteristics,age characteristics and scale characteristics and listed companies choose high-quality auditors did not significantly related,but significant in the case of low financing needs.That is to say,In the case of high financing needs,the stronger the independence,the stronger the professionalism,the older and the larger the audit committee is to weaken the effect of the selection of high-quality auditors for listed companies,and its role only in corporate finance In case of insufficient demand is valid.(3)High quality of external audit can constrain accrued and real earnings management behavior.Hence,it can improve the quality of financial report of listed companies.