A Study on the Relationship between Corporate Ownership Structure and Auditor Choice

• Main Authors: Pei-Yu Su, 蘇姵瑜
• Other Authors: Ling-Chi Cheng
• Format: Others
• Language: zh-TW
• Published: 2009
• Online Access: http://ndltd.ncl.edu.tw/handle/53307114769942361024

碩士 === 中原大學 === 會計研究所 === 97 === Based on the characteristics of ownership concentration, controlling owners can reinforce the controlling power through pyramid structure, cross-holdings and participating management so as to achieve the divergence between control rights and cash flow rights. In doing so, they are motivated to expand wealth by depriving the minority shareholders. According to the agency theory (Jensen and Meckling〔1976〕), controlling shareholders may introduce external monitoring mechanism that limit his or her ability to hold up minority shareholders and hence mitigate the agency conflict. This research focuses on the listed companies between 2003 and 2007. It is intended to discover whether companies would voluntarily employ accounting firms with high audit quality to assure outside investors of the credibility of accounting information and then mitigate the agency problem and then benefit the improvement of corporate governance. In this research, the divergence between control rights and cash flow rights are surrogate variables for controlling shareholders who deprive the minority ones. They review agency problem. Meanwhile, reputation of the accounting firm(s) is surrogate variables of audit quality. It is discovered that the higher the controlling power, the high motivation of controlling shareholders to occupy the company resources and deprive the minority shareholders; at the same time, the divergence between control rights and cash flow rights get wider, as the controlling shareholders are more capable to affect the company strategies, occupying wealth of the minority shareholders. At the time, the agency problems are getting worse so that the company will need accounting firms with higher audit quality in order to mitigate the agency problem. Besides, it is found that in the board of directors, when the controlling shareholders take the positions of directors, general managers or supervisors at the same time, they can reinforce the entrenchment effect through the controlling over the company strategies. When they are able to get involved in the management, worsening the agency problem, the company is inclined to hire accounting firms with high audit quality to mitigate seriousness of agency problem.