Pledge Of Controlling Shareholders’ Equity,Social Responsibility And Audit Fees

Equity pledge of controlling shareholder has the characteristics of fast financing speed and low cost,making it highly favored by financiers.However,the risks are also worth paying attention to.When the stock price drops to the closing line,creditors will require the pledgor to supplement the collateral deposit,prompting the pledgor to maintain the stock price through earnings management.In addition,tunneling behavior can harm the interests of small and medium-sized shareholders,so controlling shareholders need to disguise their tunneling behavior through earnings management,leading to increased risks for the company and the capital market.As an external supervisor,it is particularly important for auditors to accurately identify the risks brought by equity pledge,and their judgment on risks is mainly reflected in audit fees.The auditor’s judgment of risk is mainly reflected in the audit fees.If the auditor believes that the Audit risk brought by the equity pledge is high,it will charge higher audit fees,on the contrary,it will charge lower audit fees.Therefore,this paper has certain research significance.This thesis takes the data of A-share listed companies in China from 2012 to 2021 as the research sample,and combines literature analysis and empirical research methods to conduct research.According to the research context of this article,relevant literature on equity pledge of controlling shareholder,social responsibility,and audit fees is reviewed and summarized.Based on the theoretical basis provided by existing literature,the relationship between equity pledge of controlling shareholder,social responsibility,and audit fees is analyzed and corresponding hypotheses are proposed.Then,appropriate variables are selected and regression models are set up,and descriptive statistics,correlation analysis,multiple regression analysis,and robustness testing are sequentially conducted.Research has found that equity pledge of controlling shareholder is positively correlated with audit fees,and social responsibility can suppress the positive correlation between equity pledge of controlling shareholder and audit fees.Further research has found that there are differences in the moderating effects of different dimensions of social responsibility on the relationship between equity pledge of controlling shareholder and audit fees,and the proportion of executive shareholding and the nature of property rights can affect the moderating effect of social responsibility on the relationship between equity pledge of controlling shareholder and audit fees.Based on the above research conclusions,this thesis proposes the following suggestions:(1)At the level of listed companies,internal governance should be strengthened while actively fulfilling social responsibilities;(2)Accounting firms should develop and require auditors to strictly implement risk assessment procedures,and systematically and comprehensively consider the risk of equity pledge of controlling shareholder;(3)Regulatory authorities should strengthen the qualification review of equity pledge of controlling shareholder,remind pledgee to be vigilant about company earnings manipulation,further standardize the disclosure system of information related to equity pledge,and strengthen communication with other third-party supervisory agencies to create a collaborative supervisory environment among all parties.