An Empirical Research Between The Reform Non-tradable Shares And The Quality Of Listed Company In China

In order to comprehensively analysize the relationship between reform of non-tradable shares and auditor independence, taking into account that comparing the data of the same sample through participating in the reform and of after would be more intuitive to reflect the effects of reform of the listed company the effects to audit quality, we constitute panel data using four year data of 155 companies completed share reform till the end of 2005 in this paper, with the hope of better understanding of the effect from reform of non-tradable shares to auditing system to enhance the audit quality. This paper consists of six parts:Chapter 1,Introduction. This chapter introduced the background of selected topics,significance of selected topics and the framework of the paper.Background of the selected topics: Reform of non-tradable shares in China's capital market, changed the fundamental reform of the listed company, it encourages the ownership structure, the big shareholders and the management behavior and the internal and external governance mechanism changed,but all of those affected by this reform are the important participants of audit system.Certified public accountants audit system is the gaming equilibrium, each participant's interests and other basic have fundamental changed caused by this reform, when the gaming equilibrium of participants will change accordingly.So,what will be the effect to the audit quality from the the environment changes of audit system caused by reform of non-tradable shares is our concern.Chapter 2,Literature review. Share-trading reform indirectly improved certified public accountants audit system environment so as to improve the quality of audit. In order to better carry out the theory, the impact of audit quality factors, changes in environmental auditing system for the impact on audit quality, the current theoretical circles on the effects of share-trading reform of the research, as well as split share structure reform of the study on the impact of audit quality literature were reviewed.Chapter 3,theoretical analysis and the assumptions. This chapter first explain the audit system theory of participants,points out that the audit system is a kind of game equilibrium among the participants who Shared with a commom faith.Then, by analysis the changes of ownership properties and features of the participants casued by the reform of non-tradable shares of, we put forward the following hypothesis: H1: Reform of non-tradable shares helps to improve the auditing quality, and compared with before changing, the listed company of earnings management level can be decreased; H2: The proportion of outstanding shares and audit quality has positive correlation; H3: Controlling shareholder and high quality audit requirements will be poured into the u-shaped relation.At last, Caused by the reform of non-tradable shares of ownership concentration changes on the audit quality analysis, we proposed hypotheses: H4: The competition betweenr big shareholders helps to improve corporate governance, so as to improve the auditing quality;and H5: managers and audit requirements are weak positive correlation.Chapter 4,Positive test design. In this paper,we constitute panel data using four year data of 155 companies completed share reform till the end of 2005 in this paper.All data is from CSMAR database, collect and arrangement of basic data using Microsoft Excel 2007, statistical analysis was used EVIEWS5.1.Chapter 5,The empirical study results and analysis. From the analysis of a descriptive statistics, we can find the overall surplus management in the DA value, the FIRST shareholder value and the ROE value are decreased ,but other indicators are improved than those of values before reform.By the panel data model GLS estimation method, the empirical results are consistent with the assumptions basicly;but also have no consistent circumstance: tradable shareholder and audit fees are not significant correlation; there is no significant correlation between the balances of big shareholders and audit quality.Chapter 6,Conclusion. This chapter summarized main conclusions of this paper. The empirical results show that the share-trading reform indeed made audit quality improved, the shareholder and the company executive pay more attention on corporate value, optimize the structure of company treatment, for certified public accountants audit work providing a good working environment. However,although tradable shareholder increased proportion of their share, but still not exert their influence on corporate governance ; at the same time,the balance between the big shareholders did not good to audit independence.