The Causes For Accounting Information Distortion And Its Solutions

Accounting information plays an important role in the corporate governance. In accordance with accounting information, all stakeholders, such as shareholder, creditor, bank, and government can monitor the performance of the company and make all sort of financing, and investment decisions. Thus, accounting information distortion has a negative effect on the economic and social situation. The thesis begins by analyzing one important feature of accounting information - reliability, and give out a definition on accounting information distortion, and its classifications. Based on the theory of principal-agent theory, information theory, and insider control theory, the thesis further analyze the underlying causes of the accounting information distortion. The thesis cites current situation of China as an example for the causes of accounting information distortion. After analyzing its causes, the thesis attempts to make concrete solutions for accounting information distortion from the perspective of internal corporate governance and external mechanism. This thesis mainly analyses the actual situation of China. By introducing the content of US public accounting reform, the thesis hopes to give a reference to the solution for China's accounting information distortion.