The Nature Of Real Controller, Interest Community And Accounting Information Quality

Accounting information quality has been a hot topic of the researcher both at home and abroad. The development of China's securities market and the high frequency of accounting fraudmake the Chinese market in demand of high quality accounting information. At the same time, Chinese characteristic and cultural backgroundalso provides a unique perspective and unique research background for the domestic and foreign researchers. An important feature of our country's listed companies is that the state-owned companies account for a large proportion, the original purpose of China's securities market is to solve the problem of state-owned company's finance and corporate governance.Scholarsat home and abroad conduct a lot of research on the nature of actual controllers for the state-owned enterprises. Researches mainly focus on the influence of investment, company performance and compensation to employees of state-owned enterprises. Some scholars think that state-owned enterprisesprotect investors better and improve the ability of corporate governance,state-owned enterprisesare favored in the capital market and the payment of state-owned enterprises'executiveis restrained, etc. Others think state-owned enterprises reduce the company's efficiency, and state-owned enterprise make less use of the commercial credit,etc.These scholars' researches provide a useful perspective to improve the corporate governance of state-owned enterprises. However, there are few studies to examine the research of state-owned enterprises from the perspective of accounting information quality.Especially which is an effective meansto improve accounting information qualitythrough internal or external governance.This dissertation studies the determinants of accounting information quality and the effective ways of governance of State-owned listed enterprises in China. On the basis of findings both at home and abroad, the accounting information quality of state-owned enterprises is discussed compared to that of private enterprises, and discussed thesuitable measurements for China's state-owned enterprises'accounting information quality and an effective way to improve the quality of state-owned enterprises is worked out----public bidding auditor.This dissertation studies the effect of nature of actual controllers on the quality of accounting information via multiple regression analysis. This dissertation finds that earnings management is lower when the nature of actual controllers is state-owned. When the nature of actual controller transfers from state-owned to non-state-owned, earnings management is higher; when the nature of actual controller transfers from non-state-owned to state-owned, there is no remarkable changes of earnings management. By using propensity score matching, combining with the difference in different methods for robustness test (PSM-DID), the conclusion remains thesame. This confirms the fact that the nature of state-owned can inhibit earnings management and improve the reliability of accounting information. When using the financial restatement to represent the quality of accounting information, found that financial restatements of state-owned enterprises is more significant, indicating that state-owned enterprises ismore suitable for the financial restatement to represent the quality of accounting information.As runners of the state-owned companies own the control rights of residual equity rather than residual claiming rights, they share the common interests with their employees by paying more to the employees. As a result, the method of improving accounting information quality through internal control of the companies doesn't work. After analyzing the cause and effect between the transferring of control rights and employee salary, here are some findings. The salary of ordinary employees is on a remarkable rise after the company transfers from private into state-owned, while managers'pay doesn't increase obviously. When control rights transfer from state-owned company to private company, the managers' pay rises remarkably while the ordinary employees' pay decreases insignificantly. It conclude that managers and employees form an interest community in the state-owned company.When managers and ordinary employees have formed an interest community, external governance will prove to be an effective governance approach to improve the accounting information quality in the state-owned enterprise. China's State-owned Assets Supervision and Administration Commission of the State Council (SASAC) issued rules in 2004 that assigns auditors for state-owned enterprises ultimately controlled by the central government (CSOEs). This dissertation studies whether these rules improve accounting information quality and decrease audit fees. By using the data from Chinese listed State-owned enterprises (SOEs), it finds that accounting information quality for CSOEs has been improved and audit fees have been decreasedand the rules that assign auditors for state-owned enterprises ultimately controlled by the local governments (LSOEs) don't have such effect on LSOEs. Further analysesindicate that CSOEs are more likely to hire big auditors and LSOEs are more likely to hire small auditors within the same region. Our findings suggest that limiting the management's influence on CSOEs helps improve accouting information quality and decrease audit fees.State-owned Assets Supervision and Administration Commission's recruitment of hiring auditors didnot spread to all state-owned enterprises. Insteadthey only select some of the state-owned enterprise to conduct the recruitment of auditor each year. Since the State-owned Assets Supervision and Administration Commission's selecting auditors can improve the quality of accounting information of state-owned enterprises, the selection of auditors can be extended to all the state-owned enterprises. This dissertation can provide direct and reasonable evidence for relevant government departments, practitioners and academics on how to improve the accounting information quality in state-owned enterprises.