The Research On The Influence Of Directors' And Officers' Liability Insurance On Audit Fee

With the improvement of the legal system and the strengthening of market supervision,the number of litigation cases faced by listed companies is increasing day by day.The supervisory risks faced by directors and senior executives are also increasing,and the demand for directors' senior management liability insurance is increasing.Directors' and Officers' Liability Insurance is a type of occupational insurance designed to reduce or circumvent the risk of personal liability for misconduct in the performance and to protect the personal property,so as to encourage directors and executives to work diligently.Scholars have found that Directors' and Officers' liability insurance has two opposite views on corporate governance.One holds that Directors' and Officers' liability insurance can be used as an effective incentive mechanism to enable executives to make decisions with no worries.Insurer as an external supervisor,regulates and restrains the improper behavior of executives and improves corporate governance.The others hold that Directors' and Officers' liability insurance has the function of "shelter".It can transfer risks to insurers,increase the opportunism and self-interest behavior of senior managers,intensify agency conflicts and produce bad governance effects.In the western developed countries,Directors' and Officers' liability insurance has developed earlier and the insurance coverage rate is very high.However,the introduction of Directors' and Officers' liability insurance in China is relatively late,the insurance coverage rate is relatively low and the development is relatively lagging behind.In this context,how do auditors,as evaluators of the company's business activities,perceive the governance effect of Directors' and Officers' liability insurance,and then affect the evaluation of audit risk,thereby affect audit fee.This paper sorts out the relevant literature on Directors' and Officers' liability insurance and audit fees,and researches the impact mechanism of directors' liability insurance on audit fees.At the same time,this paper explores the impact of market process as external environment and inside controls as internal environment on audit fees This paper takes the data of listed companies from 2003 to 2017 as the sample,takes the company size,audit opinions and the proportion of accounts receivable as control variables,adopts the multiple linear regression model,and uses the empirical method to study the impact of Directors' and Officers' liability insurance on audit fees.And further explore the degree of market process and inernal control quality as the regulatory role,and finally draw the following conclusions:(1)Directors' and Officers' liability insurance and audit fees are significantly positively related,in other words,the holding of Directors' and Officers' liability insurance increase audit fees;(2)In different market processes,the lower the market process,the more significant the impact on audit fees;(3)In different internal control quality,the lower the quality of internal control,the more significant the impact on audit fees.The research conclusions of this paper help to expand the research on the related fields of Directors' and Officers' liability insurance,and also supplement and the literature in the relevant fields of the audit market.On this basis,it puts forward policy recommendations for the further development of Directors' and Officers' liability insurance.