Director Compensation,Earnings Management And Audit Fees

Auditing service is one of modern professional services,and investors and market regulators hope to enhance the trustworthiness of financial information through professional services provided by third-party accounting firms.With the continuous development of China's capital market,the audit market also ushered in a new development opportunity.Today,the need to carry on the financial statements of listed companies audit and internal control auditing has become a standard of information disclosure,there are more and more private companies in order to improve the quality of information disclosure,in the case of no mandatory regulatory requirements,choose to disclose such information.Auditing plays an increasingly important role in the process of continuously improving the quality of financial information disclosure."Enron event" effect on the audit market is profound,it make all people aware of accounting firm,if you can't keep the professional caution is not found the problem in time,revealed the problem,how serious consequences.Therefore,how to guide the healthy,fast and independent development of audit service industry becomes a research topic with high attention and urgent need to be solved.Audit fees are the important basis for accounting firms to gain foothold and development,and whether the audit fees are reasonable will directly affect the quality of audit work.To some extent,the standard audit market should establish a reasonable audit fee system.In 2010,the national development and reform commission and the ministry of finance issued "certified public accountants service charge management method" is one of the important documents to guide the present audit market pricing,each region can make appropriate adjustments according to the local actual situation.According to the actual implementation of the policy,it is mainly based on the assets and income of the audited units.Generally speaking,the introduction of the method is a framework for audit pricing,which is a significant exploration.In recent years,the market reform is deepening and the market is changing more and more rapidly.Can the implementation of this method achieve the ideal effect? Is the guidance rate set by the various localities in accordance with the measures effective? Is there room for improvement? Become the problem that needs to be answered at present.The audit work under the guidance of the current risk oriented audit model requires the auditor to formulate reasonable audit strategies,identify risks and deal with risks from the perspective of audit risk.That is to say that the cost of audit resources is based on the risks identified and dealt with.After in-depth study of audit fees in 1980,Simunic set up a classic model of audit fees,which initially clarified several influential factors of audit fees and provided a direction for subsequent research.With the deepening of the research,the research on audit fees also proceeds from the search for explicit influencing factors and gradually to the recessive influence factors.Also embarks from the audit risk factors,this paper first studied the relationship between earnings management and audit fee,and then on the basis of investigation the salary incentive effect on the relationship between directors,and further explores in different ownership structure of the company,the director of the salary incentive effect of the question of whether or not to change,so as to provide new empirical evidence for the existing research discussion,and put forward valuable Suggestions according to the new findings,provide theoretical support for the further marketization of audit fees.This paper adopts the research method combining normative research and empirical research.Scholars at home and abroad will first generalizes the research achievement of related issues,with earnings management and the relationship between audit fees,the relationship between corporate governance and earnings management as well as the influence factors of audit fees for the literature review of the main line,and on this basis are summarized and reviewed in this paper.This paper mainly based on principal-agent theory,"deep pocket" theory and optimal contract theory,and analyzed the main problems in this paper.This paper holds that earnings management behavior is widespread in the listed companies,and regardless of the degree and direction,can cause the "distortion" of accounting information quality,increase the audit risk,leading to the increase of audit fees.At the same time,effective internal governance reduces audit risk,while directors play an important role in corporate governance mechanism.If the directors are motivated by the "effective contract" and show active and effective supervision,then earnings management behavior is likely to be significantly inhibited.However,the presence of large shareholders may to reshape internal power structure will form a "substitution effect" and "free rider" behavior,thus to some extent,weakens the inhibition effect of directors on earnings management behavior.In view of the above analysis,this paper puts forward three research hypotheses,in reference to Simunic audit fees,on the basis of classical model,combined with other research results and research needs,this paper constructs the regression model,and use of a-share non-financial listed companies in China from 2013 to 2016 sample data to carry on the empirical analysis,finally the following main research conclusions: first,the earnings management have significant positive effects on audit fees,the higher the degree of earnings management,audit fees are higher;Second,the higher the remuneration of directors,the stronger the restraining effect on earnings management,the weaker the positive correlation between earnings management and audit expenses;Thirdly,the equity structure will influence the compensation incentive effect of directors.On the one hand,the remuneration incentive of directors in the company with the lower proportion of the largest shareholder still has a significant inhibitory effect on earnings management.On the other hand,in a company with a high shareholding ratio of the largest shareholder,the remuneration incentive effect of directors will be weakened,and its inhibition to earnings management will be reduced.Finally,based on the results of the empirical research,this paper puts forward some targeted policy Suggestions,including further improving the guidance of auditing service charging standards and improving the applicability of the guidelines.To further promote the construction of the director system and the reform of the remuneration system of directors to form an effective supervision mechanism for directors;We will further improve the company's information disclosure system and create a transparent and real information environment.