Research On The Effect Of Audit Opinions On Operating Performance And Over-investment In Listed Companies

In recent years, fraud scandals occur repeatedly in the securities market at the domestic and external, such as Enron, Time Warner, World Communication and so on. This series of malignant events cause huge losses to the vast number of investors. Meanwhile, the independent, objective and impartial status of CPA are also questioned by the public. The root for them is separation of ownership and management rights and the principal-agent relationship. This two rights separation that makes managers who have specialized knowledge that mastered the control of the company. At the same time, it also gave rise to the conflict of interest between owners and agents. With the development of the securities market and investors to join, this kind of conflict becomes more complex and the contradictory main body is constantly changing:the contradiction between the owner and agent, the contradiction between the agents and investors, the contradiction between large shareholders and small shareholders and so on. These contradictions is largely because of the existence of information asymmetry and agent cost.The generation of independent audit played an immeasurable role to reduce the problem of asymmetric information and agency problems. Audit opinion as the final results of certified public accountants work, its importance is self-evident. Up to now, the research on audit opinions is mostly confined to the two directions:one is the influence factors of audit opinions research, the other is the information content of audit opinion research. Research on audit opinion information content is relatively lack, and there is no unified conclusion. The research scope of "Audit opinion information "content is mostly limited to the stock market and bond market from the macroscopic, on the other hand are mostly limited to investors and creditors from microscopic. Therefore, to research information content of audit opinion from the perspective of management, can not only enrich the research literature and the research perspective, but also help us to understand the present situation of the application of audit opinion in the company operations better. So, this research has a theoretical significance and practical significance.This article adopts the method of combining normative research and empirical research, to mainly study the application of audit opinion on the company’s operating performance and excessive investment from the perspective of management, and to explore whether the audit opinion to get the attention they deserve in the middle of the management, so as to enhance the use efficiency of the audit opinion. This paper will be divided into five parts, the specific content is as follows:The first part is introduction. Introduces the research background, the problem and the purpose of this study, introduced the research significance of this article from theory and reality, and then, pointed out the main research methods and research content, finally introduces the structure and the contribution of this article.The second part is literature review. This part emphatically introduces the scholars of audit opinion in the stock market, bond market and other aspects of applied research from the information content of audit opinion. Based on this, this paper advances the development direction of research on information content of audit and this paper’s research question.The third part is the theoretical analysis. Given a detailed elaboration mainly from the principal-agent theory, asymmetric information theory, contract theory of the firm and free cash flow hypothesis. Then, this paper introduces the relationship between auditing opinions and enterprise operating performance, excessive investment from the angle of theory.The fourth part is empirical research. First put forward three research hypothesis in this paper combined with theory analysis, hypothesis1: Non-standard audit opinions can improve the operating performance of companies; Hypothesis2:non-standard audit opinions can inhibit company to excessive investment in the next year; Hypothesis3:companies that received standard audit opinion showed a stronger investment-cash flow sensitivity in the next year. And then explain the definition of explained variable, Explain and control variables, pointed out that the source of samples required and basic processing method. Based on this, we build the regression model in this paper. Finally, this paper introduced the descriptive statistical analysis, variables correlation test and multicollinearity test of sample data, and empirically the influence of audit opinion on the company’s operating performance and excessive investment.The fifth part is the conclusion and prospect. First introduces the research conclusion of this paper and proposed policy recommendations according to the study. Then, points out the limitations of this study and possible innovation points. Finally, put forward the development direction of research on information content of auditThrough the empirical test, we get the following conclusions:Firstly, listed companies that received non-standard audit opinions, its next year’s operating performance are significantly lower than that received the standard audit opinions. And found that the standard audit opinion and the company’s operating performance is significantly positively related, non-standard audit opinion and the company’s operating performance is significantly negative correlation.Secondly, standard audit opinion and company’s excessive investment are in significant positive correlation, non-standard audit opinion and company’s excessive investment are in significant negative correlation, this instruction companies that received standard audit opinion are more inclined to overinvestment, non-standard audit opinion can inhibit the excessive investment levels of the company.Thirdly, standard audit opinion increased the companies next year’s investment-cash flow sensitivity, non-standard audit opinion will reduce the company’s investment-cash flow sensitivity in the next year.Fourthly, state-owned enterprises or state-owned holding enterprises are more likely to overinvestment after received standard audit opinion. That illustrates the industry effect that the impact of audit opinion on the company’s excessive investment is obvious.The possible innovation of this paper:Firstly, select the perspective of management as the research content of audit opinion information, and discusses the impact of audit opinion on the operating performance and excessive investment of listed companies. There are roughly two directions on the audit opinion research, one is the influencing factors of audit opinion, the other is the audit opinion on the influence of other factors. About hysteresis effect of audit opinions, most scholars’research starting point is the investor and creditor, this paper adds the direction of the research on audit opinion hysteresis effect.Secondly, on the choice of methods, segmenting the audit opinion type and different industries, used to empirical research on the audit opinion on the company’s operating performance and the influence of excessive investment, and has obtained certain research results.