On The Employment Of Auditors Under The Background Of The Contest Of Corporate Control

In recent years,listed companies have experienced frequent audit failures,the maintenance of audit independence and the high value of auditing during the economic transition period have become the focus of many scholars and practical experts.With the increasing control of the listed companies' mergers and acquisitions,the control disputes between the shareholders and management affect the operation of the listed company,which in turn affects the auditor's appointment decision.The research of the appointment of auditors in the context of control rights can reveal the value of audit services and the economic consequences of the appointment of auditors.This paper takes the influence of control of Kondal company on the employment of auditors as the object of the case study.The purpose of the study is to analyze the reasons for the controlling shareholder and the board of directors to compete for the employment of auditors in the context of control rights contest,and to arouse refection on the employment of auditors.The second is to analyze the current problems in the auditor employment process,how to standardize and optimize the auditor employment process.This paper analyzes the motivations of Kondal's shareholders and the board of directors for the appointment of auditors.The new controlling shareholder,Jingji Group hopes to accelerate the control of contention by obtaining the appointment of auditors.Kondal's board of directors – Huachao Investment Management hopes to seek “cooperation” with auditors by controlling the appointment of auditors.At the same time,this paper analyzes the loopholes in the current auditing procedures of auditors in China,which is manifested in the imperfect system of independent directors that makes the independent directors fail to play an effective role in the appointment of auditors.The regulatory system is not perfect,and the regulatory authorities fail to take effective measures to resolve the situation when the contest of audit appointment happens.In view of the problems in the competition for the appointment of auditors of Kondal,this paper puts forward the following suggestions.Firstly,the disorderly competition of the company's control rights may lead to the issue of auditors' appointment rights.Therefore,it is necessary to improve the supervision system to ensure the orderly operation of the company's control market.Secondly,the mechanism of independent directors are not sound,which in turn affects the effective operation of auditors' appointments,and therefore needs to optimize the independent audit committee and independent director system.Thirdly,the current auditor appointment system arranges the final decision-making power of auditors to shareholders' meetings.The major shareholder is in a dominant position in the decision-making of the shareholders' meeting.Therefore,in order to improve the fairness of the auditor's selection,we can perfect the voting mechanism so as to improve the influence of small and medium-sized shareholders on the selection and appointment of auditors.Fourth,the issue of the competition for auditors' appointment is ultimately the result of conflicts of interest among market participants.This paper suggests that we can standardize the behavior of the main body of the capital market transaction and propagate the subject of capital market transactions about the spirit and integrity of the capital market system construction so as to create a good environment for the effective operation of the appointment procedure for the auditor.The innovation of this paper is mainly reflected in the following two aspects.First,there is always controversy about whether there is any value in auditing during the economic transition period.In the context of control rights competition,which is based on the battle of controlling shareholders and management around auditor employment,this paper reveals the motivation of controlling shareholders and management to compete for the company control rights and indicates that the auditor's employment is an important part of the company's control.Second,from the aspect of the current corporate governance arrangements,the auditor's employment is exercised by the audit committee,but in practice it is either controlled by the controlling shareholder or the management.The case study of this paper reveals that the current auditor's employment arrangement may fail in the context of control contention,indicating the importance of contract culture and external supervision in maintaining the effective operation of corporate governance.