China's Listed Companies Have An Audit Committee Study Of The Factors

The Audit Committee is an important system in corporate governance. The Audit Committee has a long history in foreign countries. In 1939, the concept of the Audit Committee was introduced by SEC for the first time in the McKesson & Robbins Case. On July 30^th 2002, President George W. Bush signed the Sarbanes-Oxley Act and in 2004 Enterprise Risk Management-Integrated Framework was published by COSO. Both of the documents met the needs of enterprise risk management and caused the worldwide reform storm in corporate governance. As a result, the audit committee was introduced by Chinese supervision institution in 2002 and since then there had been many discussions about the construction of Audit Committee. Until 2007, 42% of the listed companies volunteered to set up Audit Committee, in which the state-owned listed companies accounted for 46%, while the non-state-owned companies 35%. With the development of the audit committee system, the study of the Audit Committee began more and more popular. The theory of Synergy Effect and Deprivation Effect advanced by scholars in corporate governance filed obtained the attentions from experts and scholars in accounting field, and also offered analysis framework for the paper.Through reviewing the development of the Audit Committee first, the paper found that most of the listed companies, which set up the Audit Committee, in America and Europe, were characteristic of one orientation corporate governance mode and adopted the Independent Director System and also political, economic, social and cultural environment in common. However, different from those developed countries, Chinese companies, like most companies in Asian countries, have a high degree of concentration of equity, dependent supervisor organization, the board acting as CEO and so on. In short, the corporate governance of these listed companies has not been satisfied. Although China government has introduced the Supervisory Board System of the two orientation corporate governance structure, the effect is not remarkable. Thus, a question is: can the system adapting to the United States resolve the questions of corporate governance in Chinese companies? Which factors affected our companies to establish an audit committee on earth? After making a literature review, the paper concluded three influence factors of the audit committee set and brought up hypothesis. Finally, the paper got the conclusion as follows. First, the non-state-controlled listed companies had the same feature of ownership with all the listed companies. Second, there was Deprivation Effect existed in the non-state-controlled listed companies which also would take the initiative to establish an audit committee. But at this time, the Audit Committee would not represent the benefits of both small shareholders at all. Third, this article also found that the greater proportion of independent directors, the lower probability of non-state-controlled listed companies establish an audit committee.According to the result, the paper proposed that the government should give greater autonomy to the listed companies in order to choose the suitable mode of the Audit Committee. In addition, the public investors and the regulatory authorities should reconsider the system of independent directors and the audit committee system, especially pay more attention to the system environment. And finally, make an improvement of the relationship between the board of supervisors and the Audit Committee.