Emperical Analysis About The Influence Of Ownership Characteristics On Audit Demand Of Listed Company In China

Accounting is the business language, the full and proper disclosuring accounting information is the the basic premise to realize fair trade in the capital market .Investors decide whether to invest, creditors decide whether to loan,both of which must rely on the real and timely accounting information.Independent audit is to assure accounting information,which can help the users evaluate the quality of the accounting information disclosured.and then improve the value of the corporation. The demand of audit is divided into two steps,our country has formed the first step of demand which is the mandatory demand,the sencond step , spontaneous audit,whose value relys on the quality of the audit services, as a result the requirement of audit is equal to the requirement of audit with high quality.Either seen from the manufacturers theory or seen from the participant system,the research about the influence of ownership characteristic on audit demand of listed company has great theoretical and practical significances.In the second charpter,after reviewing previous research on the audit demand theory, relationship between ownership characteristic and audit demand,proxies for high quality audit demand,we found that most scholars usually consider big 4 as high quality auditor. but In China it is not suitable to use audit size and auditor`s reputation to measure audit quality , FengLiu&Changjiang Lv have found that there is no significant difference between big 4 and non-big 4 in China because of the low practice risk .On the other hand most of previous studies are limited to one aspect of ownership characteristic,such as the largest owner`s share,the identity of the firm`s controlling owner or the managers share,however the largest owner`s share,the identity of the firm`s controlling owner or the managers share,and whether foreign owners are all important features of ownership characteristic,we will use disretionary accurals to measure audit demand,select all these factors to make a comprehensive analysis about the influence of ownership characteristic on audit demand of listed company.In the third chapter,after selecting all A shares listed companies from Shanghai stock market as a sample to analysis the main ownership characteristic of listed companies in China.,we found that controlling owner with the stated-owned identity holds too many shares,as fas as the ownership structure, State-owned shares occupy the absolute super position ,which shows that Full Circulation Reform for Listed Companies have not achieved good effects,and it is not good to improve the governance structure of listed companies.Then,based on the the audit demand theory and particular institutional environment of China,we bring four basic hypotheses as follows:(1)there exists negative correlation between the stated-owned identity of ownership and the audit demand,(2) there exists positive correlation between the foreign owners` share and the audit demand,which includes two aspects:there exists positive correlation between the foreign institutional owners` share and the audit demand,there exists positive correlation between the foreign circulation owners` share and the audit demand,(3) there exists negative correlation between the managers share and the audit demand,(4) there exists negative correlation between the the largest owner`s share and the audit demand.In the forth chapter,we select 484 A shares listed companies from Shanghai stock market to make an analysis about the influence of ownership characteristic on audit demand of listed company based on the following standards:with long time of listing and complete data,having no replacement of CPA firms from 2005 to 2007,neither ST nor *ST, the largest owner`s share is no more than 75%,etc..Then based on the analysis aboved,we select option as the dependent variable standing for the audit demand,select hold(the largest owner`s share),control (whether stated-owned identity),topmp(manager shares),flegal(foreign institutional owners` share),findiv (foreign circulation owners` share) as the independent variables. In view of scholars at home and abroad having all found that the short-term solvency of the company has greater impact on audit demand,we select wcr that is the current ratio as the control variable to eliminate the effects,and then construct a logistic regression model to analyze the influence of ownership characteristic on audit demand of listed company.In the fifth chapter,since we use disretionary accurals to measure audit quality ,first,we use the cross-sectional variation of the Jones Model to calculate the nondisretionary accurals,and then get the disretionary accurals of each firm,second,we use cluster analysis to separate the disretionary accurals into low class and high class,which stands for the high quality of audit and low quality of audit.After making descriptive statistics about the variables of the logistic regression model,we found that there exists significant differences between companies with high quality audit demand and the companies with low quality audit demand in the aspects of the nature of the ownership variable,foreign circulation owners` share and the current ratio, there also exists differences between companies with high quality audit demand and the companies with low quality audit demand in the aspects of manager shares, the largest owner`s share and the foreign institutional owners` shar,but not so significant.We found that :(1) while the corporate whose controlling owner has the stated-owned identity or which has foreign owners ,desires more audit service of high quality,but the result that the corporate whose controlling owner has the stated-owned identity,desires more audit service of high quality is inconsist with other sholars` result and our expects,which may caused by mulitple identities of government and dual nature of stated-controlled owners,(2) Due to the data mission etc.,we do not found there exists significant relationship between managers share and audit desire,(3)the more the largest owner holds,the less high quality of audit service the corporate desires, which shows that the main impact the largest owner on corporate governance is the interests conflicts between controlling owner and the minority owners,not interests conflicts between management and the minority owners,which is to say that the central agency problem in corporation focuses on how to limit controlling owner damage the interests of the minority owners,Besides,we found that our corporation controlling owner owned too high percentage share,and there exists the condition that the controlling owner is also the manager,which is not good to improve the governance structure of listed companies.At the same time, to increase the stability of the results, we use the adjusted Jones model to re-estimate the disretionary accurals,and then found that there is no significant difference between the two results. But there still exists many deficiencies in the data and the methods,we could use more years of data,increase the industry and regional variables,and establish non-linear model etc.to do deeper research.