Research On The Influence Of Stock Pledge Of Controlling Shareholders On Audit Charge

Listed companies take external financing as their main way of financing.They can raise funds by issuing equity,but this will not only face higher financing costs,but also disperse shareholders' equity.In recent years,more and more shareholders pledge equity,because it can not only obtain financing,but also retain shareholders'equity.According to the statistics of Wind database,up to 2017,3,438 of the 3,628 a-share listed companies in China have pledged their shares,with A total pledge ratio of 94.76%.It can be seen that equity pledge has become an important way for shareholders of listed companies to conduct secondary financing in the capital market.Equity pledge is mainly the debt financing behavior of shareholders who pledge their shares of listed companies to financial institutions to obtain loans.However,while equity pledge brings financing convenience,there are also some risks inevitably,such as the relinquishment of control rights.The existing research shows that the motivation of "tunneling" and earnings management of listed companies is obviously increased after the controlling shareholders pledge their shares.Considering the potential risks of stock pledge,the regulatory authorities put forward specific requirements on the disclosure of stock pledge information,so that investors can more directly and comprehensively understand the relevant situation of stock pledge of listed companies and make reasonable investment decisions.As an external governance mechanism,what risk response measures will accounting firms take when facing the enterprises pledged by controlling shareholders?Does the internal corporate governance structure of the audited listed company,such as equity checks and balances,and senior executives' shareholding influence the relationship between equity pledge and audit fees?Therefore,based on the above background,this paper will deep Shanghai,two cities(2009-2017 a-share listed companies data as sample,first to the controlling shareholder equity pledge of the audit fees of listed companies,whether the inspection as an external governance mechanism of firm can identify the controlling shareholder equity pledge and the different characteristics of equity pledge the risks.After that,we consider the balance of stock ownership of listed companies and whether senior executives' stock ownership can adjust the relationship between stock ownership pledge of controlling shareholders and audit fees.Firstly,on the basis of relevant research background and literature review,this paper analyzes the relationship between pledge of controlling shareholders' equity and audit fees in China,and considers the moderating effect of corporate internal governance structure on the relationship between them.Secondly,based on the existing literature,this paper puts forward theoretical analysis and hypothesis.Then,this paper takes listed companies whose controlling shareholders pledged their shares from 2009 to 2017 as samples for empirical research.Then,robustness tests were performed by substituting key variables.Finally,the conclusion is drawn and some Suggestions are put forward.From the empirical test results of this paper,it can be seen that the regression coefficient of the controlling shareholder's equity pledge ratio is significantly positive,indicating that the firm will fully consider the adverse economic consequences brought by the holding shareholder's equity pledge and charge higher audit fees to the listed company with high equity pledge ratio.Moreover,the audit fees charged by the firm for non-continuous pledge of equity are higher than those for continuous pledge of equity,that is,the continuity of pledge of equity will affect the audit fees.On this basis,further consider the corporate internal governance structure of the relationship between the two.The degree of equity balance has an obvious regulating effect on audit fees of the firm.The better the equity balance is,the lower the audit fees of the firm for the company with high equity pledge ratio of controlling shareholder,and the lower the audit fees of the listed company with low equity pledge continuity.This shows that a good degree of equity balance can inhibit the relationship between high equity pledge ratio and equity pledge continuity to some extent.After considering executive stock ownership,the coefficient of the cross product between executive stock ownership and equity pledge is significantly negative,which indicates that executive stock ownership to some extent can adjust the relationship between equity pledge ratio,equity pledge continuity of controlling shareholders and audit fees.The above shows that the company's internal governance structure can adjust the relationship between equity pledge and audit fees to some extent.The innovation of this paper is to give a new definition of the stock pledge of controlling shareholder,and consider the stock pledge rate from the perspective of the stock pledge unit,and consider the stock pledge from the perspective of whether the stock is continuously pledged or not.Secondly,from the perspective of equity checks and balances and executive stock ownership,the relationship between the two is re-studied to explore whether the internal governance structure of a company can restrain the adverse economic consequences brought by the stock pledge of controlling shareholders,so as to reduce the audit fees.