Shanghai-Hong Kong Stock Connect Program,Litigation Risk And Audit Fees

In 2014,the China Securities Regulatory Commission and the Hong Kong Securities and Futures Commission decided to approve the Shanghai Stock Exchange,the Hong Kong Stock Exchange Limited,China Securities Depository and Clearing Co.,Ltd.,and Hong Kong Securities Clearing Co.,Ltd.The pilot of the interoperability mechanism(referred to as Shanghai-Hong Kong Stock Connect Program),its official transaction was launched on November 17.As an important part of China's capital market opening to the outside world,Shanghai-Hong Kong Stock Connect Program has made important contributions to strengthening the capital market linkages between the two places,promoting the two-way opening of the capital market,deepening exchanges and cooperation,expanding the investment channels of investors in the two places,and enhancing market competitiveness.The implementation of Shanghai-Hong Kong Stock Connect Program has brought many opportunities to enterprises,which not only can expand the financing channels of enterprises,but also help to enhance their brand awareness.At the same time,however,the internal governance structure of corporate shareholder structure and investor relationship management has also changed,bringing new challenges to the company.Through data research,we found that since the implementation of the Shanghai-Hong Kong Stock Connect Program,the number of A-share listed companies that have opened the business has increased by about 27% from 348 in 2014 to 445 at the end of 2016,but the amount of these companies' complaints From 6.5 billion to nearly 14 billion,the increase rate is about 115%,and the increase in the amount of the complaints is much faster than the increase in the number of companies.In addition,we found that many companies paid higher audit fees after joining Shanghai-Hong Kong Stock Connect Program.The above phenomenon has caused this article to think,so this article will be based on the policy innovation of Shanghai-Hong Kong Stock Connect Program,to explore its impact on the A-share listed companies' litigation risk and audit fees.The research in this paper has certain theoretical and practical significance for promoting the effective development of Shanghai-Hong Kong Stock Connect Program,improving internal governance to prevent litigation risks and standardizing audit service charges.Based on the theoretical basis of Audit risk theory,Insurance theory,Information asymmetry theory,this paper makes corresponding assumptions on the Shanghai-Hong Kong Stock Connect Program,litigation risks,and audit fees.And selects the 2012-2016 A-share listed companies on the data,excluding financial,insurance companies,undisclosed audit fees or audit fee disclosure companies and other companies with incomplete data,we eventually receive 11,351 samples,and the data were regressed with 1% winsorize tailing.By analysing the results,the following conclusions can be drawed:(1)The higher the company's litigation risk,the higher the audit fees.(2)The implementation of the Shanghai-Hong Kong Stock Connect Program will increase the A-share listed companies' litigation risk.(3)The Shanghai-Hong Kong Stock Program will affect the audit fees by influencing the risk of A-share listed companies' litigation.This paper finds that from the perspective of enterprises,the increase in litigation risk faced by A-share listed companies joining Shanghai-Hong Kong Stock Connect Program will pose certain risks to the company,but from a policy perspective,the strict external supervision mechanism of Shanghai-Hong Kong Stock Connect Program has led to more Many corporate governance issues have emerged,and to a certain extent,the company has accelerated the improvement of internal governance structure and improved comprehensive governance capabilities.Therefore,in the long run,the Shanghai-Hong Kong Stock Connect Program business has positive and positive economic benefits for promoting the healthy development of the market.Based on the above research conclusions,in order to better promote the healthy development of domestic capital market,this paper proposes the following recommendations from the government and regulatory authorities,listed companies and firms.(1)The government and regulatory authorities should establish a reasonable information disclosure mechanism,expand the scope of Stock Connect Program and standardize the audit fees of the firm.(2)Listed companies should raise their internal governance level,establish a sense of litigation risk control,and establish a sound litigation risk prevention and control system.(3)The firm should fully consider the risk of litigation,charge a reasonable fee,and enhance the auditor's legal risk awareness and improve the quality of auditing.The main innovation of this paper is to expand the research perspective of Shanghai-Hong Kong Stock Connect Program,study the impact of Shanghai-Hong Kong Stock Connect Program on the company,and enrich the existing research literature on Shanghai-Hong Kong Stock Connect Program.At the same time,this paper analyzes the mechanism of Shanghai-Hong Kong Stock Connect Program by changing the litigation risk and affecting the company's audit fees,and connects the Shanghai-Hong Kong Stock Connect Program with the auditing field,which expands the research ideas and provides a little research for scholars to carry out further research.There are two points in this paper:(1)using narrow sense of litigation risk to measure,the measurement is not comprehensive;(2)The research model needs to be further improved.