Accounting Contract Of An Economic Nature And The Legal Regulation

With the economic revolution taking further steps, the legal framework has been set up and improved in China, including special regulations on accounting activities, Along with this process, the likelihood and forms of conflicts on accounting have changed over time. Besides the ones caused by administrations, the conflicts between equal market participants has seized more attention. This has not only reflected the legal awareness of the participants, but also indicated that the functions of accounting may have evolved. During the economic transformation, interpretation of the value of accounting has become an important objective of research.Compared with usual ones, the accounting conflicts are most likely to occur between the parties of corporate, which constitute interest relations among each other on the foundation of corporate structure. As a result, an effective analysis on the accounting conflicts may not be possible if the corporate is still regarded as an inseparable notion. The development of corporate contract theory has open the corporate "black box", enabling the effective research of the basic elements of corporate and the relations among them. The corporate contract theory is able to provide a unique perspective from which a series of theoretical issues can be probed, including the explanation of accounting conflicts, evaluation of accounting functions, discussion of accounting regulations and settlement of accounting lawsuits, etc.Based on previous studies, this dissertation analyses the function of accounting information in the context of the corporate contract structure, brings forward the basic idea that the accounting information functions as contract benchmarks for a series of fundamental corporate contracts, by applying corporate contract theory and related accounting and law theory. Also, as development of accounting contract theory, this dissertation analyses and summaries the economic characteristics of the accounting contract, a notion which has been redefined.Based on the study of accounting contract, this dissertation focuses on the law regulation and restriction (thereafter as "law R&R") of accounting contracts, analyses the regulation and restriction objective and the ways to achieve such objective, litigation and compensation and other basic elements. As the application of the theoretical study, this dissertation discusses the problem of capital impropriation of listed companies and pricing of the "equity for debt" restructuring in the security market. Specifically this dissertation analyses the following subjects.On the literature summarization, this dissertation divides the related studies into 6 categories: economic contract theory, the development of corporate contract theory, the corporate contract theory and corporate law studies, the corporate contract theoryand accounting studies, accounting information law R&R studies in China, law economic analysis theory. According to each category, this dissertation summarizes the previous studies in a logic sequence. The literatures on more specific issues are summarized in the subsequent chapters.On the accounting contract theory, this dissertation puts forward the necessity of setting contract benchmark during the contract process by analyzing the common form of transaction. According to different characteristic of transaction and parties involved, the contract benchmark can be categorized as "fixed benchmark" or "benchmark generated from a benchmark information system". Based on the elaboration of accounting activities and corporate contract structure, this dissertation holds that the accounting information is the contract benchmark for a series of fundamental corporate contracts, and analyses the two main mechanisms by which the accounting system performs such functions. At the same time, this dissertation holds the process of the generation of accounting information should be regarded as the contract ("the accounting contract") between the contracting parities of the corporate, and summaries the economic Characteristics of the accounting contract. As an implication of the above-mentioned theoretical analysis and also an extension of accounting theory, this dissertation theoretically explains some important accounting notions and phenomena. According to the overall research of this dissertation and related literature, the above-mentioned theoretical deduction can be reasonably justified.Based on the theoretical study of accounting contract, this dissertation puts forward the accounting phenomena of "the contract reliance on accounting information" which is related to the economic consequence of accounting information. According to the achievability of the contract intention, this reliance can be divided into "effective reliance" or "ineffective reliance". Through study on classical cases, this dissertation analyses the cause and the form of the ineffective reliance, and explains the potential legal conflicts as a result of such reliance.This dissertation analyses the current accounting information regulation in China from a variety of angels including the classification of law, the accounting process and result, the regulatory character of law, the different legal liability, etc. Based on the study of the public law and private lay instincts of accounting information, this dissertation holds that along with the transformation to market economy, the accounting information has shown more distinct of private law, and thus civil law. This dissertation summarizes the theoretical dispute over civil liability of accounting information and focuses on the legal liability of financial misstatement.According to the overall requirement of this research, this dissertation carries out a representative questionnaire study. The questionnaire study divides the studysubjects into 3 categories: auditors, lawyers and others, and puts study emphasis accordingly. After the analysis of the questionnaire effectiveness, this dissertation analyses the statistics of the questionnaire results, including the basic attitude analysis of each subject category (including the attitude mean value analysis and the internal variable correlation analysis) and the attitude comparison analysis between different categories (attitude mean value comparison analysis). Based on the statistical analysis, this dissertation comes to a series of conclusions, and the overall application of such conclusions in the dissertation is also summarized. As a whole, the questionnaire study comes out with desirable results, which can be regarded as important empirical evidence supporting the dissertation.On the theoretical study of the law R&R of accounting contract, this dissertation holds that once the accounting process can be regarded as the accounting contract, the regulation or restriction over accounting process can then be regarded as over accounting contract, specifically on the contract process and the result. By applying classical contract law analytical tools, this dissertation analyses the consideration and the agreement of accounting contact. This dissertation holds that under condition of basic assumptions of economic contracts, the objective and value of law R&R over accounting contract should be consistent with the ones of common contract law. As a result, this dissertation summarizes the basic assumptions, objective and functions of common contract law. As logical extension of the discussion of the economic Characteristics of accounting contract, this dissertation analyses the internal demand for law R&R, and summarizes the Characteristics of the accounting contract law R&R (as to common economic contracts). More specifically, this dissertation holds that the objective of the law R&R should be the realization of the "impartiality" of accounting information, in order to protect the reasonable expectations of the contract parties. Also, this dissertation puts forward different ways to realize such impartiality. As an indispensable element of law R&R, the litigation and compensation, the path to settlement accounting conflicts and other related issues are also discussed. As an application of the law R&R theoretical study, this dissertation reconsiders the summarized current law R&R of accounting information in China.On the forensic accounting study, this dissertation first summarizes the literature in forensic litigation support research, and then concludes on the practices in US. This dissertation discusses the technical function and corporate contract function of forensic accounting in specific litigation. More theoretically, this dissertation analyses the function of forensic accountants in the settlement of accounting contract settlement. As a theoretical conclusion, this dissertation holds that the value of forensic accounting lies in the strengthening the verifiability of accounting contract and thus saving corporate contract transaction costs.As a practical application of the theoretical study, this dissertation analyses the problem of capital impropriation, which is quite common in the security market. In the overall theoretical framework, this dissertation concludes that some accounting information has been appointed as legal benchmark to ensure the execution of certain corporate contract (forbidding illegal withdrawer of capital), which is enforced by law. Based on the results of relate law, this dissertation holds that the mechanical reliance on accounting information benchmark can cause failure to reach legislative intention, and cause frustration to reasonable expectation of corporate contract parties (especially minority shareholders). In conclusion, this dissertation holds that the Characteristics of accounting information should be carefully considered when setting up legal benchmark in the legislation process, also the court should try to protect the reasonable expectations of related parties rather than rely on setup benchmark in form in specific lawsuits.As a logical continuation of the capital impropriation problem, this dissertation analyses the "equity for debt" pricing problem based on a famous restructuring case. This dissertation holds that the administration's price restriction of "no lower than equity per share" is substantially based on accounting information benchmark of the corporate contract "each shareholder shares the equity averagely". However, with the specific conditions of "equity for debt" restructuring in consideration, this dissertation believes that the controlling shareholder has violated more fundamental corporate contract on investment, and the reliance on the above-mentioned accounting information contract is against the protection of minority shareholders. From the perspective of reasonable expectation protection, this dissertation puts forward a price-setting model and stimulates the calculation with related corporate financial accounting data.In the conclusion and advice section, this dissertation summarizes the institutional background, theoretical framework and conclusions, and holds that accounting and law activities can both be regarded as institutional mechanism to mitigate conflicts and facilitates cooperation among people. Based on the theoretical conclusions, this dissertation comes up with some concise advices concerning the improvement of the current institutions in China.Finally, this dissertation summarizes the research limitations and research potential in the future.