The Effect Of Audit Quality On The Cost Of Equity Capital Of Listed Companies

In the capital market,the economic value of auditing is to improve the quality of financial reports of listed companies,reduce agency costs and information risks,reduce information asymmetry between investors and enterprises,and optimize the allocation of resources to provide protection for investors.If there is no audit or audit quality is poor,it is difficult for external investors to provide accurate information on business operators to make accurate judgments,cannot effectively assess the company’s future investment projects output,this time can only refuse to invest,otherwise it will request Additional high rate of return on the capital provided by the risk of loss to be compensated,which means that in other conditions remain unchanged,the higher the quality of corporate financial reporting audit,the investor required capital return will be lower,leading to lower capital costs.Although China’s audit market presents a low concentration and highly competitive characteristics,even so,we the four major domestic audit market structure step by step.The research of relevant scholars shows that there are systematic differences in the audit quality of the firms in China.Therefore,enterprises can choose different auditors to convey effective signals to the market and influence the investors’ decision-making and expected rate of return.In this process,the economic value is in the emerging period,this process is about independent audit.Based on the institutional background of the socialist market economy with Chinese characteristics,this paper analyzes the audit quality and equity capital relation cost in China’s capital market,and considers whether auditing with high-quality could save equity capital cost for listed companies.It is hoped that the study of the relationship between two costs,the independent auditor would be tested by auditing quality and equity capital cost as capital market purifier and information firewall has played a role to verify the information value of independent audit and choose the behavior of the firm for the listed company.The relevant agencies to provide some guidelines for reference and.The audit quality includes the two dimensions of earnings management and financial statement restatement,which respectively replace recessive and dominant audit quality to study its economic consequences.Based on this,this paper selects 5330 samples of all the A-share listed companies from2013 to 2015,used normative and empirical analysis method to analyze the influence of audit quality on equity capital cost.We could know that this two factors is negatively correlated,that is,high quality audit can reduce the cost of equity capital of listed companies.At the same time,the two alternative indicators,the level of earnings management and the restatement of the financial statements are positively correlated with the cost of equity capitalof the company,respectively,indicating the high cost of equity capital of companies with high earnings management and companies with restated financial statements will increase its equity capital cost.