Controlling Shareholder's Equity Pledge?Internal Control And Audit Pricing

In recent years,with the development of China's capital market,equity pledge as a new financing way,with its convenient,fast financing advantages,favored by shareholders.The main reason for shareholders to choose equity pledge financing is that the equity pledge does not directly lead to the transfer of shareholders' control rights when the shareholders obtain the funds.Only when the shareholder's maturity fails to pay off the debt or the stock price falls sharply to the warning line and the liquidation line,the shareholder will lose its control right when the shareholder fails to meet the requirements of the pledgee.Compared with the small and medium shareholders,the controlling shareholder has more conditions and ability to intervene in the company's decision-making for its own interests because of its special holding position.So in order to continue to maintain the equity pledge of decision-making rights of listed companies,to avoid the control of stock price volatility caused by the transfer of risk,part of controlling shareholder misappropriation of listed companies and their resources to ease the financial difficulties through the earnings management activities to maintain price stability.The risk of controlling shareholders' equity pledge is much higher than that of small shareholders,so it is more meaningful to study the equity pledge financing behavior of controlling shareholders.Due to the existence of asymmetric information and agency problems that China's private enterprises is difficult to obtain the trust of financial institutions such as banks,facing financial constraints,the pledge of shares of private enterprises in China have a higher incidence of.According to the relevant statistics show that by the end of 2015,about 50% of China's private listed companies in the company's controlling shareholder of the equity pledge,so it is of practical significance to research on China's private enterprises controlling shareholder equity pledge.According to the audit pricing model,the audit pricing is mainly affected by two factors,audit risk and audit cost.After controlling shareholders' equity pledge,the listed companies may be "hollowed out",occupying the listed company resources,and bringing greater risks to the company's operation,thereby increasing the audit risk of auditors.At the same time,if the joint management of shareholders carries out earnings management,the degree of information asymmetry between auditors and companiesincreases,resulting in an increase in auditor's audit costs.Then,whether the auditors will pay attention to the equity pledge behavior of the controlling shareholders of listed companies,and realize the risks to the auditors,and improve the audit pricing accordingly? Different pledge funds will send different signals to the market,whether the capital investment will be different will further affect the audit pricing? As an important governance mechanism of internal control within the company,can inhibit the tunneling behavior and alleviate the information asymmetry,so the quality of internal control will affect the relationship between the controlling shareholder equity pledge and audit pricing?At present,there are few scholars from the perspective of internal control and pledged funds to invest on stock pledge impact on audit pricing,audit pricing and equity pledge rich field of existing research results can therefore this research,enhance the vigilance of investors in the investment,promote the construction of internal control in the enterprise at the same time.In order to study the above problems,firstly,equity pledge,internal control,audit pricing and other related research literatures,then combining with the principal-agent theory,asymmetric information theory,signal transmission theory and the pledge pledge funds how to affect audit pricing,internal quality control of the controlling shareholder equity pledge and the relationship between audit pricing effects theoretical analysis of the mechanism of controlling shareholder,and puts forward the related hypothesis.Finally,in 2011-2015 years China's Shanghai and Shenzhen A shares of private listed companies as research samples,through descriptive statistics,single variable test,correlation analysis and multiple regression analysis to test the controlling shareholder equity pledge behavior of auditor audit pricing will have an impact,equity pledge funds impact on audit pricing and the quality of internal control for controlling shareholder pledge and audit pricing regulation.The results show that:(1)the audit pricing of controlling shareholders' equity pledge is higher,because auditors pay attention to the adverse effects of equity pledge on the company.(2)when the equity pledge funds are invested to the controlling shareholders themselves or the third party,the audit price of auditors is higher.(3)good internal control quality can weaken the positive correlation between ownership pledge and audit pricing of controlling shareholders.Finally,according to the conclusion of the research,from the improvement of information disclosure system,strengthen the equity pledge,the pledgee risk management,improve the internal governance of shareholders and strengthen theconstruction of laws and regulations in four aspects and puts forward related suggestions.At the same time,this paper points out some shortcomings in the research process,and puts forward the research prospect.