Checks And Balances Between Executives,capital Market Openness And Audit Fees

In the context of the continuous advancement of economic globalization and the impact of the new crown epidemic,companies must cultivate core competitiveness in order to adapt to the ever-changing internal and external environment and seek survival and development.Building an efficient senior management team is not only to meet the needs of the external complex environment,but also the internal motivation and inevitable requirement for the company to maintain its core competitiveness.The senior management team is an important factor in the internal governance environment.Most of the literature regards the CEO as the representative of the management team and studies its role in corporate governance.However,non-CEO executives,as important members of the executive team,have an important influence on the company’s decision-making.On the one hand,they have information or professional advantages in certain functional areas and have the ability to participate in enterprise decision-making;non-CEO executives,on the other hand,have an incentive to participate in corporate decisions for career advancement and reputation.Corporate decision-making is the result of joint decision-making by all senior executives.The balance between CEO and non-CEO executives is bound to affect the effectiveness of corporate internal governance,which is conducive to reducing audit risks and thus affecting audit costs.This thesis selects the annual data of Chinese A-share listed companies from 2010 to2020 as the initial sample to empirically test the correlation between the "bottom-up" supervision checks and balances of non-CEO executives on CEO executives and audit fees,as well as the moderating effect of capital market opening on the two relationships.The results show that :(1)non-ceo executives’ checks and balances on CEO are negatively correlated with audit costs;(2)After the opening of the capital market,the negative correlation between the checks and balances of non-CEO executives on CEO and audit fees becomes weaker.The empirical results show that the role of non-CEO executives in the supervision and balance of CEO has an internal governance effect,which can effectively contain the short-sighted behavior of CEO,improve the level of internal governance,and reduce audit costs.After the opening of capital market,the sensitivity of audit fees to the internal governance effect of non-CEO executives decreases.Further analysis shows that :(1)audit fees in low-competitive industries and low-competitive companies are more sensitive to the internal governance effect of non-ceo executives than those in high-competitive industries and low-competitive companies;(2)In enterprises with low ownership concentration,the internal governance effect of non-CEO executives has a stronger weakening effect on audit fees;(3)According to the property rights of the group test,it is found that the internal governance effect of non-CEO executives in non-state-owned enterprises is more significantly negatively correlated with audit costs.The significance of this thesis is reflected in the enrichment of the research results in the field of power balance within the management team,providing a new idea to optimize the senior management team,and expanding the new perspective of corporate governance.Secondly,the analysis of capital market opening and the internal governance and audit costs of senior management team under the same framework expands the economic consequences of capital market opening and reveals the governance effect of capital market opening.The research results provide useful enlightenment for further improving the corporate governance mechanism :(1)attach importance to the construction of senior management team,optimize the structure of management team,improve the construction of internal whistle-blowing system,maintain the independence of non-ceo executives,and promote the prevention of internal fraud risk;(2)Promote the process of de-administration,combine "top-down" and "bottom-up" governance modes,promote the internal governance effect of non-CEO executives,improve the decision-making efficiency and effect of senior management team,and promote high-quality development of enterprises;(3)Adhere to opening up,build an interactive mechanism between capital market reform and corporate governance,comprehensively consider the interactive relationship between the external environment of enterprises and corporate governance,and improve the governance level of Chinese enterprises.