A Study About Private Order Of Accounting Information Governance

Facing the low quality of accounting information, government and law cannot shoulder the important task alone while market and the society have already spontaneously evolved many alternative governance institutions. They can exit without the regulation of law and enforcement by government and are called private order. This paper applies the research about private order in economics to accounting research, using game theory and approach of history research to study the function, property and changes of private order in accounting information governance. As to a developing country like China in its economic transition, it is expected that this research may help people understand private orders in the field of market order like accounting information governance, promote the construction and development of relevant private orders and give an impulse to the regression of government, market and social function respectively.This paper first establishes a basic concept framework, which is based on Aoki' s (2001) definition of institution for the analysis of the institution concept of accounting information governance and the explanation of the concept, shape, classification and function of private order of accounting information governance.Then, this paper gives a deep analysis of the four private orders.The author makes a research on the private order of relation-based governance and maintains that the private order of relation-based governance plays a role in governance when legal norm and formal contract have not come into effect. He also attempts to analyze how relation-based governance transits to rule-based governance: the enlargement of enterprise scale will promote this transition, but in relational society, this kind of transition lacks motive force, it needs the government to play a greater role.The author regards civil audit as a game equilibrium which includes many market participants, and analyzes the factors which can realize the equilibrium. After using the change history of American civil audit to explain the above-mentioned conclusion, we can see how the civil audit changes from the early complete private order to the mode in which the private order and public institution collaborate now. In the present institution centered on the rule-based governance commonly exists a kind of relation-based private order, which can influence investors in their appraisal of managers' reputation through multiple and unofficial information channels, and then urge investors to vote by foot and hand. It is not based on the national laws and formal contract. It is called reputation order in this paper. The research isconcentrated on a sub-field of accounting information governance——earning management. The author studies on the function of reputation order in the governance of earning management as well as the relation among earning management, moral preference and accounting reputation.The accounting ethics order is regarded as the indispensable settlement for accounting information governance. This paper discusses how it is formed. First of all, there should be a good professional ethics education system and public opinion atmosphere, which will help train cooperative managers. Then, non-cooperative managers have to realize the benefit of cooperation. In this way, they will cooperate with cooperative managers. The knowledge of history and culture, mandatory system and their own experience of institutional changes can help the managers realize the benefit of cooperation.Finally, this paper draws the general conclusion from the above specific ones. From the general frame of private order, the author summarizes the research angle, function, property, changes of the private order in accounting information governance and the relation between private order and public institution.