The Impact Of Relationship Quality Between Enterprises And Governments In China On Corporate Financial Reports And Governmental Accounting Supervision

Repeated exposure to financial reporting scandals in the world capital market to warn people to consider continuously which quality standards financial reports should satisfy with and how to meet these quality standards. How to improve financial reports quality has been a critical issue which must be solved not only in the course of promoting economy to develop properly in the world, but in the process of promoting modern accounting research in the academic field. After the "Enron" affair, international accounting field has experienced an unprecedented revolution.July 25, 2002,US Congress has made an important signal by Sarbanes-Oxley Act:accounting problem can not only simply solved by accounting technologies and tools. If accounting problems do not analyse in touch with other subjects, it is difficult to find a satisfied solution. In this paper, we have a research for the relationship quality between enterprises and accounting standard-setting parties, enterprises and government regulators, and research for the influence of relationship quality to financial report quality under framework of financial reporting supply chain. The theory is to explore the relationship quality between enterprises and makers of accounting standards, and enterprises and governmental accounting supervision.The research perspective for improving the way for financial reports quality is not only an innovation but a practise combined accounting with other subjects.Except for introduction of Chapter One and conclusion and deficiency, this paper is divided into three parts. Part one(Chapter Two) is the analysis about the course of financial reporting supply chain, discussing the aim of course designation is to promote financial reports quality constantly.The thought is tally closely with the course of PDCA circle.This part also simply concludes mutual relationship type about subjects involved in financial reporting supply chain, emphasizing the point of discourse which is the relationship quality between enterprises and makers of accounting standards, enterprises and governmental accounting supervision.Part Two(Chapter Three,Four) is to explore the relationship quality between enterprises and makers of accounting standards and its affect to the financial reports quality.Part Three(Chapter Five,Six,Seven) have searched for the evaluation of the affect of the governmental accounting supervision, relationship quality between enterprises and governmental accounting supervision and its influence of regulatory effect of government accounting.In this paper, we have the following conclusions:(1) The financial reporting supply chain process and the PDCA cycle, is consistent not only in program design but also in the concept. Participants in the financial reporting supply chain have seven mutual relationships. The state of mutual relationships can be measured by relationship quality dimensions.(2) Theoretical analysis considers trust, satisfaction, commitment, authority, solidity of relationship and quality of accounting standards as the relationship quality dimensions between enterprises and accounting standard-setting. Reliability, relevance, timeliness and understandability are the basic quality requirements of financial reports. trust, satisfaction, commitment and communication are dimensions of relationship quality which will influence the effect between enterprises and governmental accounting supervisions. Accounting-specific assets, accountant occupation morals and financial reports quality are dimensions to measure effects of governmental accounting supervision.(3)Results of descriptive statistics in the questionnaire survey reflect that interviewees have low trust and satisfaction for makers of accounting standards, but they identify more with their authority. And interviewees do not agree with revision and improvement of accounting standards (dimension of commitment) in time by its makers.Nearly half of the interviewees consider that the quality of accounting standards should be improved.(4)Results of modeling certification shows that relationship quality between enterprises and makers of accounting standards is constructed by four dimensions of quality of accounting standards, commitment, satisfaction and authority.These four dimensions will influence with each other.Every dimension will have great effects on the financial reports quality, dimension of authority has the great influence on the financial reports quality. The relationship between enterprises and governmental accounting supervision are constructed by three dimensions of trust, satisfaction and commitment. These dimensions will influence with each other. Effects of governmental accounting supervision are constructed by three dimensions of accounting-specific assets, accountant occupation morals and financial reports quality.Also these three dimensions will influence each other.Every dimension of relationship quality have had positive effects on governmental accounting supervision,but difference of influence's level is not obvious.(5)In the condition of severe management and penalty by the government, the strategies matrix of enterprises is to obey the law. On the contrary, the strategies matrix of enterprises is to break the law.The level of conviction is inverse ratio to the level of penalty and governmental supervision, supervised ability and the discount factor of enterprises. Enhancing abilities of governmental accounting regulators is the commitment of carring out effective supervision. Supervising and punishing in time will reduce unlawful practice of enterprises.The innovation of the discourse is:(1)Perspective on relationship quality of participants in the financial reporting supply chain, we research the quality of financial reporting and effect of governmental accounting supervision, and establish the corresponding structural model. This paper presents that relationship quality of participants in the financial reporting supply chain can affect the quality of financial reporting and effect of governmental accounting supervision. The paper constructs two structural models. One is the model that relationship quality between enterprises and makers of accounting standards can have an effect on financial reports quality. The other is that relationship quality between enterprises and makers of accounting standards can influence the effect of governmental accounting supervision. And we have certified them in the article.(2)The paper definite the dimensions of relationship quality between enterprises and makers of accounting standards, and between enterprises as well as governmental accounting supervisions. We construct two measurement models which are the dimensions of relationship quality between enterprises and makers of accounting standards, and between enterprises and governmental accounting supervisions as well as certify them. The paper applies theory of relationship quality not only to the field of accounting, extending the field of the theory of relationship quality, but to the relationship between enterprises and governments, broadening the contents of the theory of relationship quality.(3)The paper measures the process of enterprises executing accounting standards by the accounting-specific assets and the accountant occupation morals. And utilize financial reports quality to measure the results of executing accounting standards. From these two parts, we can find the effects of governmental accounting supervision.(4)By using structural equation model, we can research for the factors influenced by financial reports quality and effects of governmental accounting supervision, not only extends the application fields of structural equation model, but also enrich the quantitative study of financial reports quality and governmental accounting supervision effectiveness.