To promote academic exchanges between teachers and students and expand students' knowledge, our department launched the 65th "Seminar Series for Accounting Teachers and Graduate Students of Xiamen University". On the afternoon of November 26, 2019, Professor Guoqing Zhang, deputy dean of our department and doctoral supervisor, presided over this seminar and introduced us to the lecturer, and Assistant Professor Xinming Liu commented on her thesis "Is Audit Committees' Equity Compensation Related to Audit Fees?".

First of all, Professor Liu introduced the research background of this article: the history of the Sarbanes-Oxley (SOX) Act, that is, before the promulgation of the SOX Act, the management is responsible for setting audit fees. The auditors believe that auditing serves the management. For fear that executives are not satisfied with the audit results and replace themselves, auditors are often unfair, leading to numerous audit frauds, the most famous being the Enron incident.

The SOX Act stipulates that audit fees are determined by the audit committee, which is composed of independent directors and at least one financial expert. However, the industry still has doubts about the independence of auditing, hoping to disclose more relevant information, such as how the audit committee selects the audit team and how it pays the audit team.

Next, Professor Liu introduced the key research direction of this paper, which is whether equity compensation will affect the independence of the audit committee. Equity-based compensation (equity-based) can have two effects: (1) a positive role: close integration of personal interests and shareholder interests, which helps the audit committee to play a supervisory role, and (2) negative role: the members of the audit committee may act for their own interests and compromise with management's behavior in earnings manipulation.

The study found that when the audit committee gets more equity compensation, it tends to set lower audit fees, and the quality of the company's financial statements is relatively low. The equity-based compensation of the audit committee is negatively related to the company's earnings quality.

After that, Professor Liu introduced the contribution of this article. This article provides a way to explain why the equity compensation of audit committees is negatively related to earnings quality, responds to the literature of Defond and Zhang (2014), and points out that the Sarbanes-Oxley Act is not effective in all situations, which is important for supervision. For example, investors can observe the equity compensation of the corporate audit committee when investing to better judge the quality of the company’s financial statements and make better investment decisions.

Doctoral student Li Pei commented on this article, mainly made her evaluation on the article's conclusions and contributions, and raised questions about the two competing hypotheses and research design. Professoe Liu exchanged opinions with him and gave meticulous answers to the questions raised.

Finally, Professor Guoqing Zhang exchanged and discussed with Professor Liu on the proportion of cash payments in payment. They discussed some details of the thesis chapter, and made a summary discussion.

This seminar lasted about an hour and a half. The students present listened carefully and actively participated. The teachers and students all expressed their opinions. The atmosphere was enthusiastic, the students learned a lot, and the exchanges between teacher and students were deepened.