CEO Narcissism,Quality Of Internal Control And Audit Fees

In recent years,there have been many unhealthy phenomena in the capital market,especially the more serious financial fraud,which seriously damaged the interests of investors and hindered the healthy and rapid development of the national economy.Based on the existing research perspectives of domestic and foreign scholars,it is concluded that effective internal control system and high quality external auditing can effectively prevent and expose the financial fraud of listed companies.The Ministry of Finance promulgated and implemented the "Basic Norms of Internal Control" in 2009,aimed at guiding and standardizing the internal control system of listed companies,and thus improve the internal management of the effectiveness and legitimacy.But the results are unsatisfactory,the study shows that there are many problems in the internal control system construction of China's listed companies,such as the 2012 exposure of Wan Fu Sheng Ke Fraud Case,exposed a serious internal control problems.So,how to improve the internal control construction and improve the quality of internal control is a significant task,first of all,we must find out what factors affect the quality of internal control.Through the analysis and summarization of the literature on influencing factors of internal control quality,it is found that there are few studies to discuss the possible impact of enterprise managers on internal control construction.However,the entire process of company's internal control construction are inseparable from the managers,"people" is the key to internal control construction activities.Therefore,it is very necessary for us to explore the influence of managers' personal characteristics on the quality of internal control.After careful consideration,this article advocates the direct study of the psychological factors of managers is more meaningful,this paper intends to study the influence of CEO narcissism on the quality of internal control.In addition,compared with the internal governance of the internal control,accounting firm audit can be said to be external supervision.The audit came from the separation of ownership and management rights and the information needs of external investors.It plays a very important role in reducing the asymmetry of information in capital market,reducing the agency cost of listed companies and maintaining the stability of capital market.The audit service is the economic business between the accounting firm and the company,and this economic relationship will eventually be reflected in the audit fees.Audit fees should be scientific and rational,unreasonable audit fees may lead to lower audit quality.However,with the development of the capital market,there are many audit failure events.Some of the reasons for the failure of audit events is because the audit fees are not fair and reasonable,such as Lv Da Di Financial Fraud.For the same reason,this study intends to study the influence of CEO narcissism on the audit fees.Studies have shown that the quality of internal control will have an impact on the audit fees of the firm.Therefore,this paper intends to explore the effect of CEO narcissism on audit fees from the perspective of internal control quality's mediation.This paper focuses on the relationship between CEO narcissism and internal control quality,and examines whether CEO narcissism will affect the firm audit fees through mediating effect of internal control quality.The main content can be divided into the following six parts.The first part presents the research background and motivation of this paper.The second part summarizes the previous research results,further deduces out the theoretical basis of the research.The third part,according to the theoretical framework of the deduction,further puts forward the four hypotheses of this study.The fourth part is to set research variables and econometric models.The fifth part uses the empirical analysis to test the hypotheses for the further inspection.The sixth part summarizes the theoretical and empirical research results of the paper,puts forward the policy and suggestion on the basis of the previous conclusions.This paper makes a theoretical analysis and empirical test on the relationship among CEO narcissism,internal control quality and audit fees,use a sample of 253 CEOs of 249 listed companies in Shanghai and Shenzhen stock markets in the period 2008 to 2015.The theoretical analysis mainly adopts the method of induction and derivation,and the empirical test is mainly the multiple regression analysis and the robustness test.In this paper,we found that the degree of narcissism of the listed company's CEO was negatively correlated with the quality of the company's internal control.Further verification,we concluded that the quality of internal control played a part of the mediating effect in the relationship between CEO narcissism and audit fees,that is,the higher the degree of corporate CEO narcissism,the lower the quality of its internal control,and then the higher the audit fee.This study enriches the theoretical framework of internal control quality and audit fees,and also extends the research perspective of CEO narcissism,which not only affects the corporate performance,but also affects the auditor's audit service.