Research On Audit Independence From Corporate Governance Perspective

Nowadays, the independence of the audit in practice is far from being resolved although there are many researches on this problem. A series of financial scandals occurred as a result of the lack of audit independence, which implies that there are still some limitations on the current researches. The author think the limitations lie on two respects: one is that we didn't consider the relationship between audit independence and the corporate governance, the other is that we didn't realize the public goods character of independent audit reports of the listed companies. This paper will try to analyze this problem from this two new view point.On one hand, the emergence of the audit was to solve the principal-agent problem while the institutional arrangements of corporate governance are also for this sake. A relatively balanced corporate governance structure will definitely raise the independence of the audit. On the other hand, as the expansion of the meaning of corporate governance, government regulation is the formation of a series of control measures in order to increase the audit independence. With the development of the economic, more and more people such as shareholders, banks, government, as well as potential investors, will need the audit information. The audit report of the listed companies gradually has the character of public goods, so constructing a new type of audit engagement that is related with government can help increasing the independence.Firstly, this paper will analyze the relations between audit independence and corporate governance and try to find a balance corporate governance structure which help companies employing independent accounting firms with the help of logistic regression model. Secondly, this paper will try to explore the reasons why there is lack of independence from the perspective of consumers and suppliers in audit market. Finally, this paper will put forward some suggestions on how to improve the independence of the audit, in which the perfection of the audit commission is the most important factor.