The Audit Committee as an Additional Mechanism of Corporate Governance in China

摘要

As the title suggests, this thesis focuses on the issues arising from the establishment of audit committees in listed companies in China, which hitherto have been adopted by companies on a voluntary basis alongside the pre-existing structure of supervisory boards, rather than as a mandatory requirement. Regarding this unique practice in China, this thesis attempts to address three research objectives:1.To understand the effectiveness of supervisory boards (SBs) and audit committees (ACs) in China 2.To understand how the operations of SBs and ACs improve the effectiveness of supervisory governance functions in China.3.To understand the co-ordination between SBs and ACs in organisationsThe first objective is investigated by applying quantitative methods of ordinary least squares (OLS) regression and analysis of panel data. It is discovered that the companies with audit committees have more effective supervisory functions when companied to those without audit committees. The second objective was pursued by applying qualitative methods in the form of two case studies constructed using interviews and surveys conducted both via telephone and in face-to-face interviews. It is found that in both the case studies audit committees were established with the expectation of enhancing the effectiveness of the companies' supervisory functions. Furthermore, the face-to-face interview survey of five listed companies reveals that companies with audit committees in China still face issues of overlapping and missing supervisory functions between supervisory boards and audit committees. Thus the third research objective, regarding the co-ordination between the supervisory board and the audit committee in the organisation to find solutions to this very problem, is particularly relevant for corporate governance in China. This objective is investigated by interviewing two governors and conducting telephone surveys. The results highlight that there is the general expectation that these structures should be co-ordinated as one unit. There is also a demand to establish an independent control system to strengthen oversight functions, to reduce oversight costs, and to ensure the independence of the supervisors and audit committee members in order that they can execute oversight tasks, and to empower them against the executive directors and senior managers by promoting their status in the organisation.