Research On The Mechanism And Consequence Of Board Secretaries Reputation On Annual Report Readability Based On The Evidence Of Earnings Quality

As a significant methodology to deduct information asymmetry and relieve principal-agent problem,information disclosure has been becoming into one of the popular issues that is attracting broad attention from both theoretical and practical support.Based on the data analysis,previous researches focus on quantitative data information in information disclosure,and the readability of textual narrative is valued highly by academic scholars with the development of information technology during recent years.Readability is an important guarantee for the information effective transmission;furthermore,it has been proposed by the state council and the CSRC in relevant documents that listed companies should improve the annual report readability.Based on the Company Law,the board secretary is primarily responsible for information disclosure.Additionally,from the perspective of the incentive mechanism of corporate governance,the reputation mechanism is more conducive to the responsible and diligent work of the board secretary,due to the continuous development and improvement of China’s capital market and labor market,thus improving the disclosure quality of annual report.However,it is not clear whether the board secretaries reputation can play a role in the annual report readability in current literatures,and its mechanism and consequences need to be further explored.Accordingly,it attempts to reveal the mechanism of the influence of the board secretaries reputation on the annual report readability,and based on the fraud triangle theory,this paper examines the consequences of influence from the perspective of earnings quality,so as to enrich the existing theoretical research results on information disclosure and corporate governance,and provide references to relevant regulatory authoritiesThis paper includes six chapters:it introduces research background and significance firstly,then it defines the concepts and presents the research ideas which designs the research content and delineates technical route in Chapter 1.In Chapter 2,the main theoretical basis is systematized,and also,the board secretaries characteristic and repuiation,annual report readability and earnings quality are reviewed with literature reviews.As a basic study.Chapter 3 establishes the comprehensive evaluation system for annual report readability in order to measure the annual report readability.On the basis of previous chapters,Chapter 4 investigates the mechanism of board secretaries reputation on the annual report readability,and the main causes of readability changes were analyzed.With the results of Chapter 3 and Chapter 4,it constructs the mediation model among board secretaries reputation,annual report readability and earnings quality in Chapter 5.and the consequences of board secretaries reputation on the annual report readability was explored.Finally,the last chapter summarizes the conclusion and innovation,after that it puts forward the research prospect specifically.The main achievements of this dissertation are as follows:Firstly,this paper constructs the comprehensive evaluation on annual report readability of Chinese listed companies in order to measure the readability of annual report scientifically.It screens high-frequency indicators for readability based on the situation of Chinese language and referring to the readability formula for English.More importantly,we look through Chinese language classics,such as Modern Chinese and Syllabus of Chinese Words and Characters in the indicator selections.In order to ensure weights not only conform to readers’cognition,but also can reduce subjective bias,it combines the Analytic Hierarchy Process with the help of questionnaires and Monte Carlo for correction.In terms of data,we introduce R for text mining.Because of the lacking for absolute value measurement of readability,it adopts gray correlation to evaluation benefit from its differences in relative values.At last,we use correlation analysis to test the consistency of the different evaluation methods for purpose of mitigating the selection bias of evaluation methods,and import variance analysis to verify the rationality of evaluation result which accord with objective generally by the use of Fog index.earnings variation and quality of information disclosure.After correlation and redundancy test,the readability indicators in order of important are:Special.Complex.Passive,Page,ChaSen,ComSen,Sentence,and Character.Finally,the annual report readability varies significantly from industries and listed exchanges compared to fiscal years that are relatively stable.Secondly,it empirically examines the mechanism of the board secretaries reputation on the annual report readability that is measured above.This paper takes social impact and tenure as the proxy variables of reputation.After focusing on the influence of minority languages on the readability of Chinese,it empirically analyzes the influence of board secretaries reputation on the annual report readability,and explains the process of action from the perspective of linguistic bias motivation mechanism and cognitive mechanism.On this basis,this paper also examines the mechanism of action from the perspective of external legal protection and professional promotion.Meanwhile,we also introduce the violation and propensity score matching of board secretaries reputation,as well as the impact of exogenous events eontrol endogenesis,and replace the explanatory variable and the explained variable to test the robustness.It finds that the higher the board secretary reputation,the better readability of the annual report has.Furthermore,board secretaries with social impact would significantly reduce the use of professional words and passive sentences,while those with longer tenure would reduce the use of complex words.Additionally,board secretaries reputation and the influence of legal protection on the annual report readability of listed companies can be replaced by each other,and if board secretaries have the opportunity of professional promotion,it would promote the board secretaries reputation and improve the annual report readability.Lastly,according to the effect mechanism of board secretaries reputation on the annual report readability,this paper constructs the mediation model among board secretaries reputation,annual report readability and earning quality in order to explain the influence of board secretaries reputation on the earnings quality after improving the annual report readability.This paper applies the accrual-based earnings management and real earnings management to measure earnings quality,at the same time using the mediation model and the mediation effect of the relaxed constraints after test the main effect with the mediation effect,and examines the intermediary variable in the further study on language features legal protection level and different levels of earnings quality.The study found that the higher board secretaries reputation,the lower the level of accrual-based earnings management and the higher the level of earnings quality of the company,and the annual report readability plays an intermediary role in it,but it does not affect the real earnings management.Finally,the results indicate that the social impact and tenure of the board secretaries reputation act on the number of complex words and sentences in professional words and passive sentences respectively,so as to improve the earnings quality.In those areas with better legal protections,the board secretaries reputation has a stronger effect on improving the earnings quality.In particular,the quantile regression results suggest that the true meaning of earnings management--a relatively low level of earnings management--will be more strongly inhibited by the board secretaries reputation.