| There are two kinds of agency costs in modern enterprises:the first kind is caused by the conflict of interest between shareholders and managers; the other kind is caused by the conflict of interest between major shareholders and minority shareholders. Because ownership structure is always highly concentrated and the state-owned shares in the listed companies usually dominate the ownership structure, the main agency problem is the conflicts between major shareholders and minority shareholders in China and other emerging market and countries. Therefore, how to restrain the expropriation of controlling shareholders and protect t the interests of small shareholders has been a core issue of scholars'study. Generally speaking, auditor industry specialization plays a significant role in not only evaluating the legitimacy and fairness of financial statements, improving the audit quality, but also reducing agency costs. Chinese scholars' study mainly focuses on the relationship between agency costs and auditor choice, agency costs and audit requirements, auditor industry specialization and earnings management and other aspect, but there is little correlative research on the relationship between auditor industry specialization and agency costs. This paper mainly studies the relationship between agency costs and auditor industry specialization, in order to enrich the correlative research, provide empirical support on reducing agency costs and protecting the interests of minority shareholders. Further, the paper studies the influence of controller's characteristic so as to provide a reference for suppression agency cost of controlling shareholders and perfecting the external supervision mechanism of listed companies.This paper selects China's listed companies as the research objects from2008to2010.The empirical results show that in the control of company size, operating status, financial risks and other factors, agency costs and auditor industry specialization has significant negative correlation. Auditor industry specialization can cut agency costs of major shareholders. Considering controller's characteristic, the study further finds that the listed companies in non-governmental control, auditor industry specialization cut agency costs of controlling shareholders significantly, compared to the companies in governmental control. But between central-governmental and local-governmental control companies, the inhibition to agency costs is not significant. |
