The Impact Of Board Structural Characteristics On Audit Fees

Audit fees has been a very important audit research field, but also a hot issue. In order to regulate the listed companies’ behavior of information disclosure, improve the quality of information disclosure, protect the legitimate rights and interests of investors, the China Securities Regulatory Commission set out the "No.6public offering securities of the Company Disclosure Questions and Answers-payment and disclosure of Accounting Firms’ remuneration" and it was published in the December24,2002. This announcement answered the issues that should be attentioned when the listed companies pay remuneration and announce it in the annual report. It is visible that the disclosure of audit fees will be increasingly standardized.There are many factors which affect the audit fee. The company’s earnings management, the size of companies and firms, the Board and other corporate governance factors have an impact on audit fees. From the company’s perspective, the audit fees is the cost of a reduction in profits. According to agency theory, if the corporate governance mechanism is not perfect and there are many problems, the agency conflicts will be serious, and thus the agency cost will be high, which will affect the company’s operating efficiency and effectiveness. In recent years, many outbreaks of audit failure cases, the internal governance of listed companies has become the focus of attention. The Board is the core content of the company’s internal governance mechanisms, so it is necessary to exlpore the relationship between audit fees and board characteristics. Board Characteristics include structural characteristics, behavioral characteristics and motivation characteristics. Among them, the structural characteristics include board size, the post setting of the chairman and general manager and the proportion of independent directors. The factors of structural characteristics are more objective so that it may have greater impact on audit fees. Therefore this paper selects the structural characteristics, and specially study its relationship with audit fees.Based on the agency theory and concept of the audit risk, the paper makes theoretical analysis. Firstly, select the2010-2012data as a sample, using the method of descriptive statistics of variables, univariate analysis and multivariate linear regression to explore the relationship between the two. Structure of this paper is:The first part is an introduction, which introduces the background and significance of the topic.The second part is issues related to literature review. The third part is the theoretical basis and hypothesis deduction. This part describes the theory of audit fee and concept of board structure,including the functions of board. The forth part is the empirical analysis, including the proposal of hypothesis, the design of variable and model, the selection and source of sample data.The fifth part is the conclusions, recommendations and limitations of this paper.The main conclusions are:the size of the board and two posts set of the chairman and general manager have significantly a positive correlation with audit costs, while the proportion of independent directors has significantly a negative correlation with audit fees. Finally, according to the conclusions of the study,we carried out a detailed summary. From the aspects of maintaining an appropriate board size,a reasonable set of board leadership, strengthening the independence of the Board, enhancing awareness of audit risk and improving the disclosure system of audit fees I gived some suggestions. Finally, presents the limitations of this paper objectively.