Abstract This paper takes Shanghai and Shenzhen A-share listed companies from 2009 to 2019 as the research samples to study whether and how the financial asset allocation of entity enterprises affects the choice of auditors. There are following findings: (1) The financial asset allocation of entity enterprises affects the choice of auditors.The mechanism analysis shows that the holding of financial assets increases the agency cost, and the board of directors tends to choose high-quality “top ten” firms to supervise. (2) The influence of financial asset allocation on auditor selection is also regulated by management power. In management-leading companies, the ability of the board of directors to employ high-quality auditors to supervise is weakened. And the regulatory effect shows a large cross-sectional differences. The weakening effect of management power is obvious under the circumstances of weak main business profitability, low degree of marketization and lower analysts’ attention. The results show that the strong profitability of the main business, good market environment and high analyst attention can effectively restrain the self-interest behavior of the management and make up for the governance risk caused by the excessive power of the management in the corporate governance level.
2021, Vol. 38 
