Tao Li Zuyun Xue Xiamen University March 2005

1. Board Composition and the Dismissalof Auditor—— Empirical Evidence from China’s Securities Market Tao Li Zuyun Xue Xiamen University March 2005

2. Abstract • Research subject • Extant research • Hypotheses development • Research design • Research result • Conclusion

3. Research subject • Research problem • Under the specific environment in China, how does board composition of listed company influence its decision to dismiss CPA Firms?

4. Motivation • Regulations in other countries • IOSCO • Sarbanes-Oxley Act • Situation in our country

5. Extant research • Research in other countries • Francis & Wilson ,1988 • Carcello & Neal ,2003 • Lee、Mande、Ortman ,2004 • Research in our country • Shuang Li、Xi Wu，2000 • Jiangxin Geng、He Yang，2001 • Dongping Li et al. ，2001 • Zhengfei Lu、Pan Tong,2003

6. Hypotheses development • Institutional Background • Hypotheses • H1：The more board members from within,the more possibility the dismissal of aduitor.

7. H2:Alteration of president is related to the dismissal of auditor. • H3:Establishment of audit committee decreases possibility of the dismissal of auditor.

8. Research design • Sample selection • Listed companies which dismissed CPA firms in 2002 and 2003. • Definition of the variables • Explained variables • Inside • Change • Audit

9. Control variables • First • Opinion • Alien • ST • Size

10. Model 1

11. Research result

14. Model 2

15. Conclusion • During the research period, under the situation that the president of a listed company hold a post in the owned by the primary share holder company, the more board members from within, the more possibility dismissal for CPA Firms. • Listed companies that change its president are more likely to dismiss CPA Firms.

16. Listed companies without dismissal for CPA Firms are more likely to establish audit committee in directorate. • Listed companies with Special treatment or MAO issued are more likely to dismiss CPA Firms.

17. Thank You!