Stock Rights Pledging Of Controlling Shareholders,Internal Control And Auditor's Decisions

In recent years,as an emerging financing method,equity pledge has been favored by shareholders of listed companies by virtue of its convenient and fast financing advantages.The scale of equity pledge has increased year by year,becoming a super-business with a market value of over 4 trillion in a single year.Since more than 70%of the pledges belong to the controlling shareholder,once the equity pledge is on the close line,it will lead to a passive reduction of a large number of shares,which will lead to the collapse of the listed company's share price,causing huge losses to the listed company and investors,and the controlling shareholder's equity pledge will bring The potential risks have also attracted widespread attention from the practical and academic communities.Although apparently the controlling shareholder's own financing behavior,but because the controlling shareholder behavior is closely related to the listed company,its equity pledge will have a huge impact on the listed company.On the one hand,the controlling shareholder may conduct equity pledge for short-selling listed companies,and reduce the holdings of listed companies in disguise,thus increasing the uncertainty of the company's operation;on the other hand,the controlling shareholder is in the financing demand for equity pledge,in order to Maintaining its control rights,adopting earnings management and other means to strengthen the motive of performance,and aggravate information asymmetry.As an important external supervision mechanism,the auditor can accurately assess the risks brought by the equity pledge to the business and financial situation of the enterprise,and pass it to investors in the audit report,effectively reducing the agency cost has become an urgent problem to be solved.The uncertainty of the impact of equity pledge on listed companies also brings higher audit risk to auditors.Under the audit risk-oriented model,audit risk always affects auditor decision-making,so the agency problem arising from controlling shareholders' equity pledge is auditing.The division also has a profound impact on risk decision making.Therefore,the research question of this paper is raised:Will the controlling shareholder's equity pledge cause the auditor to make more cautious judgments?Does the quality of internal control have a regulatory effect on the audit risk increase caused by equity pledge?This paper first sorts out the related research results such as equity pledge,auditor decision-making,and internal control on auditor decision-making.Secondly,how the equity pledge of controlling shareholders affects auditor decision-making in combination with principal-agent theory,information asymmetry theory and insurance theory.And the internal control makes a theoretical analysis of the adjustment effect of equity pledge and auditor decision-making,and proposes research hypotheses.Finally.from 2013 to 2017,this paper selects all listed companies in China's A-shares as research samples.Through empirical study,it examines the impact of controlling shareholders'equity pledge on auditor's decision-making and the quality of internal control.The role of shareholder pledge and auditor decision-making.The risk of equity pledge.The conclusion of this paper is as follows:For listed companies with equity pledge,the auditor's decision is more cautious.The auditor charges higher audit fees and increased audit time for listed companies with equity pledge,and the higher the pledge ratio of listed companies.The more likely it is to issue a non-standard audit opinion,the quality of internal control has a significant regulatory effect on auditor decision making.