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Research On Accounting Rent-seeking Based On Equity Fanacing Of Chinese Listed Companies

Posted on:2015-02-06Degree:DoctorType:Dissertation
Country:ChinaCandidate:Z P RuanFull Text:PDF
GTID:1109330467980217Subject:Management Science and Engineering
Abstract/Summary:PDF Full Text Request
The listed companies in China are keen on equity financing while reluctant to provide returns to investors on the one hand; on the other hand the accounting information distortion of listed companies in China is very serious. This phenomenon that has been condemned universally associates closely with accounting rent-seeking. This paper studies systematically accounting rent-seeking behaviors during equity financing of Listing Corporation to provide valuable reference for the reform of Chinese share issuance system and accounting system, and the establishment of the theoretical system of accounting rent-seeking as well.Based on rent-seeking theory and the theories about the relationship between equity financing in capital market and accounting, this paper uses normative research combined with empirical research as the research methods.Firstly, the connotation and research scope of accounting rent-seeking is clearly defined based on core idea of rent-seeking theory combined with characteristics of accounting practice since accounting rent-seeking theory is deficient by now. Also basic structure of accounting rent-seeking theory and four elements for accounting rent-seeking research are proposed. The analytical framework of accounting rent-seeking are constructed as well.Secondly, the paper discusses the nature of accounting rent-seeking by equity financing from two perspectives. Firstly, the rent measurement model of accounting rent-seeking by equity financing is constructed. Secondly, the social cost and welfare effects of accounting rent-seeking by equity financing are studied by related analysis model. The paper proposes that governments’withdrawing from the equity financing and the marketization of equity financing are inexorable trend of securities market reforming.Thirdly, this paper analyses the subjects of accounting rent-seeking by equity financing and their synergistic effect. The subjects include controlling shareholders, company executives, the relevant agencies and related government departments. The control of listing company is the basis of collaborative rent-seeking subjects for rent-seeking by equity financing. Rent-seeking subjects are easily motivated to engage in collaboration if rent-seeking happens within the scope of the system because they would not go so far as to get criminal punishment. If the rent-seeking is against the law and regulations, whether the subjects will engage in illegal collaborative rent-seeking activities depends on the severity of penalty system. The key measure to constraint collaborative rent-seeking is to improve the internal control of listed corporation and agencies.Fourthly, the mechanism of accounting system rent creation is analyzed. In light of the historical process of the emergence and development of Chinese accounting system of equity financing, the government shows the general rule of "from rent creating intentionally to creating rent inadvertently ". A deeper reform is needed for the democratization of the establishment of accounting system, the marketization of accounting information application and the judicial remedy and so on.Fifthly, this paper has studied the method and the basic characteristics of accounting rent-seeking during equity financing. Listed corporation has a channel to repeat rent-seeking without legal risk. The channel operates as below:firstly, the substantial shareholders transfer benefits to the listed company; then the listed company arranges equity financing; finally the listed company returns benefits to the substantial shareholders. Case analysis shows that non-circulation stock shareholders are the biggest winners as they finally obtained most rents because of information advantage during the reform of non-tradable shares. After lock-up period expired, non-circulation stock shareholders can seek rents again. After the reform the non-tradable shares, all shares of listing company can be circulated. Although equity financing system environment has changed substantially, empirical research shows that accounting rent-seeking by equity financing still exists and in a more concealed ways, of which the main one is by manipulating payable and receivable accounts. It is also found that institutional investors are motivated to engage rent-seeking with substantial shareholders in full circulation period. Allotment of shares has faded, and the independent director has little effect on limiting rent-seeking. Therefore, ameliorating the system of affiliated transactions, disclosing related party transactions dereferencing, raising the proportion of independent directors, and implementing preferred stock system can reduce accounting rent-seeking of listed company. According to the basic principles of accounting and the study of accounting practice, the paper has summarized the regularities of illegal accounting rent-seeking during equity financing and fifteen kinds of subtle means of illegal rent-seeking on net income, net worth, net cash flow and accounting information disclosure as well. Specific case analysis shows that the methods applied by the company to be listed by illegal rent-seeking according with the above regularities, and the huge social costs is incurred. Thereupon, the implementation of fraud-oriented audit or assurance pattern, increasing liability of executives and agencies,and perfecting delisting system, and the establishment of severe punishment can effectively curb this malicious rent-seeking behavior.
Keywords/Search Tags:Securities Market, Listing Company, Equity Financing, Accounting System, Accounting Information, Accounting Rent-seeking
PDF Full Text Request
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