Study On Regulating System Of Quality Of Financial Reporting Based On Corporate Governance

It is extremely serious that most enterprises make fraud by financial reporting in China. As a samiliar public product, the quality of financial reportings depends on its whole manufacturing process, i.e., financial reporting supply chain. And analysis of financial reporting supply chain and value chain provides a new way to supervision of financial reporting, namely, financial fraud is prevented and quality of reporting is promoted based on corporate governance.The thesis deeply discusses the intrinsic relationship between corporate governance and financial reporting, and checks the relation between financial reporting fraud and corporate governance machnism of Chinese listed companies by empirical analysis. The analytical results show, financial reporting fraud manusly interacts with several governance variables, respectively, scale of board of director, number of member of supervising commission, percentage of independent director, separation of chairman of board and chief executive officer. On the contrary, there is a plus relation between stock share of top managers, ratio of debts to assets and financial reporting fraud.Based on the conclusions above, the thesis thinks that quality of financial reporting relies on every aspect of corporate governance system as follows: corporatemanagers take charge of producing of financial reporting, so they should actively recognize information gap and do their best to bridging reporting gap, and supply timely accounting information via the latest enabling technology. On the meantime, before corporate borad of director makes financial reporting exposed publicly, it must authorize its audit committee to employ outside auditor to sustainably audit financial reporting, and the audit committee should communicate the outside auditing organizations and inside corporate departments. At the same time, the outside auditors have to devote themselves to removing expected gap of financial reportings, and financial reportings without quality gap are valued after true and fair spread by news media. At last, professional explanation and analysis of financial reporting by financial analyst undoubtly enhances decision-making usefulness of reportings to corporate stakeholders.Conversely, the financial reporting supervising system based on corporate governance also can stimulate greater reform and development of corporate governance.