CEO's Position Characteristics,Corporate Governance And Accounting Information Comparability

Accounting information is the core of many information disclosed by companies,and it is the information that investors pay most attention to and consult.For the accounting academic community and the practical community,it should always be one of the topics of greatest concern to provide accounting information to users with different needs.With the continuous development of economic activities,the business model of enterprises is becoming more and more complex and diversified.In fact,the investment decision-making process of investors has become a process of choosing the best among many alternatives.Because accounting information is the important information that investors rely on in decision-making,to a large extent,the investors' choice is achieved by evaluating and comparing the accounting information of the candidate enterprises.The accounting information comparability is an important prerequisite for investors to evaluate and compare accounting information.Therefore,comparability,as an important quality feature of accounting information,has always been attached great importance by accounting standard setting institutions and scholars.IASC(IASB)have been working since the 1960s to reduce accounting standards differences and develop a common accounting standard worldwide.FASB also regards improving the accounting information comparability as the main motivation of developing accounting standards.Since January 1,2007,our country has implemented the enterprise accounting standards which are essentially similar to IFRS.One of the important reasons is to achieve the accounting information comparability with other countries.More than 100 countries,including China,have achieved substantial convergence of accounting standards.However,with the deepening of the understanding of comparability,more and more scholars realize that the improvement of the accounting information comparability requires not only the convergence of accounting standards at the macro level,but also the effective implementation of accounting standards by enterprises at the micro level.The former is the foundation of the latter,and the latter is the guarantee of the former.Both are indispensable.However,unfortunately,at the micro level,compared with other accounting information quality characteristics,such as reliability,relevance and robustness,which have been deeply studied at the enterprise level,the research on comparability(especially empirical research)has been slow for a long time due to the limitations of theoretical understanding and technical level.Until 2011,when the operational comparability measurement method of enterprise level was put forward,the research on the accounting information comparability had a significant turning point,and the research perspective was able to deepen from the macro level to the enterprise level.However,due to the late start,the empirical study of enterprise level comparability needs to be enriched and improved in many fields.This provides a rare research opportunity for this paper.In the research field of enterprise level,the relationship between the characteristics of executives and the quality of accounting information has been a hot topic.Since the measurement bottleneck of accounting information comparability at the enterprise level has been broken through,what kind of relationship exists between the characteristics of senior managers and the comparability of accounting information has become the issue of interest in this paper.Although a few scholars have explored the relationship between executive characteristics and comparability from different perspectives.However,the existing research on the capture and characterization of comparative "relative" and "incremental"features is still insufficient."Relative" refers to comparability,which is a relative index to measure the difference of accounting information between the target enterprise and the control enterprise.Compared with other quality characteristic indexes reflecting the accounting information of a single enterprise,the comparability of accounting information should be determined by the target enterprise and the control enterprise.Therefore,the research perspective may be more in line with the "relative" feature of accounting information comparability.In addition,although comparability and reliability are both important accounting information quality characteristics,from the point of view of FASB,other standard setting organizations and many scholars,comparability is an "incremental"quality characteristic.To have comparability,the accounting information of a single enterprise that participates in the comparison must have reliability.However,from the existing research on the relationship between the characteristics of senior executives and the comparability,its research ideas are similar to the research on other quality characteristics such as reliability and robustness.It is still based on the sample of a single enterprise to explore the impact of the characteristics of senior executives of a single enterprise on comparability,and the lack of attention to the "relative" and "incremental"characteristics of comparability.This deficiency may lead to the following misunderstandings:(1)when two enterprises use the same accounting manipulation to disclose accounting information,accounting information will show a high comparability between the two enterprises.(2)When comparing the accounting information of an enterprise without accounting manipulation with that of an enterprise without accounting manipulation,the accounting information comparability of the enterprise without accounting manipulation is lower.Therefore,this paper focuses on the following questions:(1)How to better capture and describe the comparability of accounting information among enterprises?(2)Are the accounting information of the two enterprises participating in the comparison necessarily comparable after they have their own reliability?If not,what conditions are available to achieve comparability?(3)As an important executor of accounting standards,will the degree of difference in the implementation of accounting standards by executives of different enterprises affect the comparability of accounting information between enterprises?(4)What role will corporate governance play in it?From the current research of comparability,these questions have not been well answered,so it is of great academic and practical value to further explore these questions.It should be noted that it is also a question to consider whether the research should start with the senior management team or a single senior manager.From the perspective of existing research,the research on the characteristics of senior managers focuses on the senior management team.This is because most of the existing studies focus on the impact of executive characteristics on strategic decision-making or organizational performance.For the macro strategy and performance of the enterprise,the decision-making effect and performance level of the enterprise is the result of the collective efforts of the executives,and it is undoubtedly a reasonable choice to take the characteristics of the executive team as the starting point.Accounting information is the "product" of enterprise accounting system.Whether all senior executives can influence the "production" process of accounting information may be a questionable topic.In other words,it may be a more reasonable choice to study the executives who can have an important impact on the"production" process of accounting information.In the modern corporate governance system,CEO plays an important role in the core position of corporate executives,and has the ability to control and develop enterprises that other executives can not replace.The dominant position of CEO in the organizational structure of an enterprise makes his judgment,values or cognitive ability have a profound impact on the decision-making behavior of an enterprise,including accounting decision-making.Therefore,when CEOs of two enterprises have different values or cognitive abilities,the implementation effect of accounting standards of two enterprises should also be different,which further affects the accounting information comparability of two enterprises.Therefore,the degree of difference in judgment,values or cognitive characteristics of CEOs among enterprises can be an excellent starting point for the study of comparability.Even to some extent,it is of great significance to study the difference of CEO's values or cognitive characteristics among enterprises,which is more likely to trace the impact of accounting information comparability at the micro level.Moreover,the upper echelons theory points out that the hidden characteristics of executives,such as judgment,values or cognition,which are not easy to observe,can be measured by the external personal characteristics,such as age,education level,professional background and tenure.Therefore,the research on the impact of CEO's values or cognitive differences on comparability can be transformed into the research on the impact of CEO's personal differences on comparability.In addition,accounting information will go through a series of links from generation to disclosure,such as production,control,authentication and disclosure.As the "producer" of accounting information,CEO is only at the beginning of this information chain.Before disclosure,the accounting information must go through the"control" of the internal governance mechanism and the "assurance" of the external governance mechanism.In other words,other stakeholders,such as executives,external auditors,investors,regulators and so on,will play a certain role in governance,which will affect the relationship between the degree of characteristic difference between CEOs and the degree of comparability of accounting information.In view of this,when organizing the research framework of this paper,the first question to be answered is whether the difference of CEO's characteristics will affect the accounting information comparability among enterprises?In order to answer this question,this paper "disassembles" CEOs according to their position characteristics,and empirically tests the way and degree of the influence of CEOs on the accounting information comparability from the difference of the specific CEO's position characteristics between the two enterprises.Then this paper further answers the following questions:does the difference of corporate governance mechanism among enterprises affect the relationship between the difference and comparability of CEO's position characteristics?It should be noted that corporate governance mechanism contains a lot of content,which mechanism can more directly and effectively affect CEO's accounting decision-making behavior is a problem to be considered.This paper holds that,because the implementation of accounting standards is a strong professional decision-making behavior,the executives or organizations with higher professional level such as CFO and audit committee in the internal governance mechanism of the company should be able to directly affect the process of CEO's implementation of accounting standards.In the external governance mechanism of the company,the certified public accountant is the most professional and authoritative person to verify the accounting information directly,while the securities analysts have an important impact on the collection,dissemination,analysis and evaluation of accounting information.Therefore,this paper takes whether CFO concurrently serves as an internal director,the ability of performing duties of the audit committee,the auditor's professional experience and the analyst's concerns as the entry point,respectively discusses the impact of the difference between internal and external governance mechanisms on the difference in CEO's position characteristics and the relationship between the accounting information comparability,so as to form a more rigorous and complete theory in this paper.Focusing on solving the above problems,the content of this paper is specifically arranged as follows.The first chapter is the introduction,which describes the research background and problems,the definition of related concepts,the significance,goal,route,content,method and innovation of the research.The second chapter is the literature review,which focuses on the factors affecting the accounting information comparability and the characteristics of senior executives,the internal and external governance mechanisms of the company on accounting information.The third chapter is the theoretical basis part,which systematically summarizes and combs the relevant theories on which the research of this paper is based.Firstly,it expounds the principal-agent theory and other basic contents,then from the characteristics of comparability,the elastic space of the existence of accounting standards,the "limited rationality" behavior of enterprises and the motivation and implementation of accounting standards by enterprise managers.Starting with the ability,this paper analyzes the relationship between the effect of CEO's implementation of accounting standards and the accounting information comparability at the micro level,which provides the basic framework for the theoretical analysis of the follow-up empirical part.Chapter four,chapter five and chapter six are empirical tests.The fourth chapter tests the influence of the difference of CEO's employment characteristics on the accounting information comparability,and then the fifth and sixth chapters respectively discuss the influence of internal and external corporate governance mechanisms on the relationship between the difference of CEO's position characteristics and the accounting information comparability.The seventh chapter is the research conclusion and enlightenment part,including the main research conclusion,research inspiration,the shortcomings and future research direction of this paper.This paper obtains the following conclusions:Conclusion 1:the difference of CEO's position characteristics will have an important impact on the accounting information comparability.Based on the CEO's tenure,financial experience,the number of part-time enterprises and political background,this paper discusses the specific impact of CEO's position characteristics on the accounting information comparability.The results show that:(1)The greater the degree of CEO tenure difference,the more likely it is to implement different accounting policies in the face of the same economic business,resulting in the decrease of the comparability of accounting information.(2)CEOs with financial experience usually have high accounting professional ability and good behavior habits of prudence and strict law-abiding.Therefore,if the CEOs of both enterprises have financial experience,it is easy to form the same judgment on the same economic business,so as to implement similar accounting policies and improve the comparability of accounting information.(3)CEO's part-time position in other enterprises can provide more reference for CEO's decision-making,at the same time,it can also avoid the decision-making risk caused by environmental uncertainty to some extent.Therefore,when the CEOs of both enterprises are part-time enterprises,the CEOs will have a higher comprehensive understanding of the conventional accounting policies or accounting practices in the industry.In the face of the same economic business,CEOs with a large number of part-time enterprises are more likely to implement accounting policies consistent with the industry's routine,which makes the degree of accounting information comparability.(4)The influence of CEO's political background of government officials and representative members on comparability is different.When the CEOs of both enterprises have the political background of government officials,the accounting information comparability of the two enterprises is low;while when the CEOs of both enterprises have the political background of representative committee members,the accounting information comparability of the two enterprises is high.Conclusion 2,the internal governance mechanism of the company will weaken(strengthen)the negative(positive)impact of CEO's position characteristics difference(similarity)on the accounting information comparability.From the perspective of whether CFO concurrently serves as an internal director and the performance ability of audit committee,this paper discusses how the internal governance mechanism affects the relationship between CEO's position characteristics and the accounting information comparability.The findings are as follows:(1)The concurrent role of CFO as internal director can make CFO have the capital to get rid of the submission and cooperation to CEO's will to a certain extent,which can help CFO to implement more effective financial supervision or provide more efficient decision support to CEO.Therefore,both CFOs of the two enterprises are internal directors,which can improve the accounting decision-making effect of CEOs of their respective enterprises,make the choice of accounting policies more appropriate and reasonable,so that in the face of the same economic business,the choice of accounting policies of CEOs of the two enterprises tends to be more consistent,and weaken(enhance)the negative(positive)effect of the difference(similarity)degree of CEOs' position characteristics on the accounting information comparability Influence.(2)The governance role of audit committee is closely related to its ability to perform its duties.The performance ability of audit committee can be reflected in independence,professionalism,diligence,reputation,scale and education background.The audit committee with high performance ability can master the financial report and internal control process of the enterprise,find out the problems existing in the accounting information generation process of CEO in time,and intervene and correct them,so as to provide guarantee for the accounting information to reflect the economic business objectively.Therefore,when the audit committees of the two enterprises have higher ability to perform their duties,the supervision effect of the audit committee on the CEO will be strengthened,and it is easier to find out the deviation and fraud in the process of accounting information generation,which makes the CEO's accounting choice more appropriate and reasonable.Therefore,when facing the same economic business,the CEOs of the two enterprises tend to choose the same accounting policy to reduce(enhance)the negative(positive)impact of the difference(similarity)of CEO's position characteristics on the accounting information comparability.Conclusion 3,the external governance mechanism will weaken(enhance)the negative(positive)impact of CEO's position characteristics difference(similarity)on the accounting information comparability.This paper discusses the impact of external audit and securities analyst on the relationship between CEO's position characteristics and accounting information comparability.Specifically:(1)Experienced auditors are more likely to form their own audit style.Through the audit supervision and accounting guidance,the auditor's style can affect the CEO's accounting choice.Therefore,in the face of similar economic business,the two enterprises that are also audited by auditors with rich experience are more likely to implement similar accounting policies,so as to reduce(enhance)the negative(positive)impact of CEO's position characteristics difference(similarity)on the accounting information comparability.(2)The conclusion of this paper supports the "Supervisory Effect Hypothesis" that analysts pay attention to.That is to say,analyst focus is an effective external governance mechanism.On the one hand,analysts'attention can improve the external information environment of the enterprise,and can provide high reference value evaluation or prediction information for CEO's accounting decision-making when encountering economic business with high uncertainty.On the other hand,analysts have professional knowledge and skills,and can find out the unreasonable accounting choice of CEO better than other external information users,so as to form an effective supervision of CEO's accounting choice behavior.Therefore,in the case of high analysts' attention,when facing the same economic business,the uncertainty of CEO's choice of accounting policy will decrease,which makes the choice of accounting policy show a certain similarity,so as to reduce(enhance)the negative(positive)impact of the degree of difference(similarity)in position characteristics on the accounting information comparability.The inno vation of this paper is embodied in the following three aspects:First,the innovation of topic selection perspective.This paper expands the research field of micro level accounting information comparability,enriches the literature of the relationship between the characteristics of senior managers and the quality of accounting information.Most of the existing researches focus on the influence of executive characteristics on the reliability,relevance and robustness of accounting information,but pay less attention to comparability.The main reasons are:(1)the measurement of comparability index is difficult;(2)there are relatively few theories to explain the influence of executive characteristics on comparability.However,since the pioneering enterprise level comparability measurement method was proposed in 2011,the empirical research on comparability is gradually increasing.In recent years,China's comparative empirical research has begun to launch,and many views and methods are in the stage of contention and improvement with a large research space.This paper seizes this research opportunity,based on upper echelons theory and the degree of difference(similarity)of CEO's position characteristics,to investigate the impact of the motivation and ability of enterprises to implement accounting standards on the accounting information comparability,and further investigate the role of corporate governance mechanism in it.Therefore,the topic of this paper is closely followed by the forefront of the discipline,with a new perspective,which can deepen the understanding of the factors affecting the comparability at the micro level.Second,the innovation of research ideas.Most of the existing researches use the similar ideas to investigate the accounting information comparability such as reliability and robustness.Different from the existing research ideas,this paper focuses on the definition and connotation of comparability,highlighting the "relative" and "incremental"characteristics of comparability.The "relative" feature means that to evaluate the accounting information comparability of an enterprise,it is necessary to find a suitable"comparative enterprise" for it,and the degree of comparability is determined jointly by the enterprise and the comparative enterprise.This "relative" feature means that the idea used to study the quality characteristics of a single enterprise,such as reliability and robustness,is not suitable for comparability.The "incremental" feature refers to that comparability is an incremental quality feature of accounting information on the basis of satisfying reliability.Accounting information without reliability will bring deviation to the calculation and research conclusion of comparability.Therefore,this paper first selects the enterprises with high reliability of accounting information according to the characteristics of "increment",then combines these enterprises in two ways according to the characteristics of "relative" to form enterprise pairs.Finally,the theoretical framework and research design are built on this basis.This idea is more in line with the definition and connotation of comparability,highlighting the "relative" and "incremental" characteristics of comparability,with strong innovation and pertinence.Third,the innovation of theoretical perspective.It has been generally accepted that the behavior of senior managers has the characteristics of "limited rationality".However,most of the existing researches focus on the influence of the "limited rationality" behavior of executives on the strategic decision-making and organizational performance.Since the accounting choice in the implementation of accounting standards is actually a kind of decision-making behavior,and this decision-making power is controlled by CEO,this paper introduces the "limited rationality" characteristics of CEO into the research situation of accounting choice behavior,and uses the "limited rationality" hypothesis to explain the impact of CEO's accounting choice behavior on comparability.The basic theoretical logic is as follows:the limited rationality of CEO will make the accounting choice of enterprise unable to reach the best,but a suboptimal choice.Although this suboptimal choice ensures the reliability of accounting information to a certain extent,because different CEOs have different motivations and abilities to make accounting decisions,different CEOs may make different decisions in the face of the same economic business,and ultimately affect the comparability of accounting information.Moreover,CEO's "limited rationality"behavior will be different in different corporate governance mechanisms,which will have different effects on comparability.From the perspective of "limited rationality",this paper explains the impact of CEO's accounting choice behavior on comparability in the process of implementing accounting standards.It can supplement the content of modern enterprise theory from the micro level,broaden the interpretation space of "limited rationality"hypothesis,and has strong innovation.