Headquarters Management And Control Capabilities And The Quality Of Group Accounting Information

Nowadays business groups are very common,and they play an extremely important role in the economic development of various countries,and this is also true for the Chinese market that is in development and exploration.Business group can alleviate market failures,protect local enterprises,and promote the economic development of China.After a period of rapid development,China‘s economy has entered the ?new normal? period,and the development trend has shifted from "high speed" to "high quality".On this important stage of China's economic transition,on the one hand,it is necessary to realize the upgrading and transformation of products and services;on the other hand,it is crucial to promote the improvement of enterprise structure and create a good economic environment at the same time.Business group is an important organization form of Chinese enterprises,and improving its organization structure and management model is of great significance to economy construction.There are agency relationships not only between external investors and business groups,but also between the group and its departments,which is called the "dual agency structure".Within a business group,the headquarters authority takes the responsibility of strategic planning and resource allocation in stead of the price mechanism.With the goal of maximizing the overall interests of the group,the headquarters should realize the role of "selection of winners" in the internal market.Subsidiary managers are more concerned about the interests of subsidiaries and even private interests,so their goals may not be consistent with the headquarters.When their development plans make conflicts,it will lead to internal agency problems.In order to realize the function of "selection of winners" in the internal market,the headquarters will allocate resources according to the marginal income of subsidiaries.Therefore,in order to compete for resources,subsidiaries may conceal and whitewash their own accounting information.In addition,the appraisal and evaluation of subsidiary managers may be linked to relevant information such as subsidiary performance,and their salary and promotion within the business group may be determined based on this.Subsidiary managers may also manipulate information in the information transmission process for private gains,providing false information.This kind of agency problem between the headquarters and subsidiaries caused by the internal agency structure of the group will have an extremely negative impact on the information exchange process between the headquarters and its subsidiaries,and aggravate the information asymmetry between the parent and subsidiary companies.The core issue of the group's internal management is the relationship between the headquarters and subsidiaries.The management and control activities of the group headquarters on subsidiaries,such as restraint,supervision,assessment and evaluation,are important ways for the headquarters to grasp the initiative stage of the group's internal information transmission.The headquarters‘ supervision and management plays an important role in alleviating the asymmetry of information among the internal levels of the group and restraining the adverse effects of internal agency problems on the efficiency of the group.While maintaining the operation of internal market,listed business groups are also responsible for information disclosure in accordance with regulations and investor requirements.It is the natural responsibility of the group headquarters to issue financial reports according to the accounting standards and ensure the quality of corporate accounting information.Managers of the group headquarters summarize and analyze the information obtained from subordinate managers,audit and report it in a proper way,and undertake the legal liability.The responsibility for improper information disclosure,and possible penalties,will be affected by the internal agency problem between the headquarters and the subsidiaries.Accounting information is an important economic resource.As the economy transitions into a new era of high-quality development,enhancing the value of accounting information are inevitable requirements for economic transformation and the improvement of modern corporate systems.Exerting headquarters‘ function and alleviating the information asymmetry caused by the internal agency problem of the group are also necessary for the sustainable development of the business group.This article pays attention to the agency problem between the managers of the headquarters and its subsidiaries,explores the disputes of the business group,and then investigates the impact of headquarters control activities on the group's overall accounting information quality.The result of the research on the group‘s accounting earnings quality shows that the headquarters can optimize the information transmission channels through the design of the management control process,and at the same time can refine and distinguish the information of the subsidiaries,alleviating the internal agency problems and information asymmetry between the headquarters and the subsidiaries,hereby improving the earnings quality of financial reports.The result of the research on group‘s accounting conservatism indicates that the control behavior of the headquarters limits the discretionary power of the subsidiaries managers,prompting them to treat accounting information more carefully.And then the managers of the headquarters can make estimates and judgments based on the overall situation of the group so as to choose appropriate accounting policies and information processing methods to make accounting information more prudent.Furthermore,this article examines the influence approach of headquarters management and control activities on group information quality from two aspects of information complexity and information independence.Firstly,the proprietary knowledge of subsidiaries is prone to deviation in the process of transferring to the headquarters.According to the path of strengthening headquarters‘ management and control capability-improving complex information processing capabilities,in cross-industry and highly diversified enterprise groups,the complexity of information is higher,which is more dependent on the headquarters‘ ability to receive and process information.In such business groups,the headquarters‘ management and control capability has a more significant impact on information quality.Secondly,in the process of information transmission,the lack of accounting information accuracy may also originate from the difference in information policies between headquarters and subsidiaries.According to the path of strengthening headquarters‘ management and control capability-the effective identification and integration of subsidiary information,subsidiaries with stronger negotiation power and higher business process independence have stronger differences in accounting policies from the business group,which requires management integration at headquarters.In addition,based on the management characteristics of different property rights groups,this article conducts an extended test on the impact of headquarters management and control activities on the quality of accounting information in different property rights enterprise groups.The inspection results show that,in enterprise groups with state-owned property rights,management activities will be affected by external factors such as SASAC control and public opinion supervision.The management and control role of the group headquarters cannot be fully demonstrated.Therefore,the headquarters management and control capabilities are more prominent in non-state-owned enterprise groups.This article studies the organizational structure and the existing problems of Chinese business groups based on the development process of Chinese market economy and business groups.It starts from the agency problem between internal levels and settles on the financial reports quality,clarifying the closed loop of the headquarters management functions-internal agency problem-the group information quality.This paper analyzes and examines the internal path,and at the same time combines the management and control characteristics of business groups with different property rights,which expands the depth and breadth of this research.The research of this article mainly has the following research contributions:First,this article tests the group efficiency dispute from a new aspect,focuses on?internal agency? side of the group's dual agency structure,pays attention to the agency problem between the parent and subsidiary levels,and discovers important internal factors affecting the efficiency of the internal capital market from the perspective of information transmission,which enriches the theory of business group research.Second,from the economic perspective,the headquarters should conduct group governance and capital allocation functions to reduce transaction costs.From the management perspective,the headquarters should coordinate or resolve agency conflicts and reduce agency costs through institutional arrangements.Only by combining the two aspects can the headquarters functions be realized.Third,this article selects the public data of the financial statements,and measures the management and control behavior of the headquarters by resource investment and the professional ability,which is more objective and accurate.Fourth,through more precise research design,the internal headquarters control behavior of the listed company is matched with the overall accounting information of the listed company.The relationship is used as the research object to make the research results more reliable and credible.Fifth,the research in this article lays a foundation for the research on how the headquarters of listed corporate groups exercise its management functions,arrange work focus,carry out strategic planning,and enhance corporate value.It has a guiding role in the management practice and organizational structure adjustment of business groups.Sixth,the conclusions of this article provide empirical evidence for improving the organization and management system,assessment and evaluation system,supervision and restriction of subsidiaries in the management practice of my country's enterprise groups.Seventh,solving the problems of the business group in the organizational structure and integration through the effective organization of the group structure is the need for the group‘s sustainable development.The conclusion of this article provides theoretical guidance for the development and governance of business groups in our country.