Research On The Validity Of Independent Director's System Of Our Country In Terms Of Earnings Management

Our country has set up independent director's system for more than four years. People have been paying close attention to its validity all the time. The purpose to set up the independent director system in the listed company is to safeguard the whole interests of the company and protect the minority stockholder's rights and interests. But in recent years, the accounting information of listed company is distorted seriously. Earnings management phenomenon is very serious. The minority stockholder's rights and interests are damaged from time to time. So people suspect the validity of the independent director's system. At present,the domestic study on independent director's system mainly concentrates on theory analysis. There is only a small amount of evidence research on dependence of the independent director and company's achievement. But it cannot prove the independent director's system is invalid that independent director's system and company's achievement are independent or even negative dependent. Perhaps, it is the independent director's supervision function that makes company's achievement reflect the real state of the company accurately. This paper makes a research on the validity of independent director's system in terms of earnings management. We regard 410 listed companies as samples and use statistical method to investigate the validity of independent director's system. We draw following conclusions: The establishment of independent director's system has not influenced the company's earnings management; The proportion of independent director takes in the board and the company's earnings management doesn't have remarkable dependence ; Companies who set up independent director's system voluntarily have lower earnings management lever than those who set up independent director's system under the policy. The research on the validity of independent director's system in terms of earnings management enriched the study on independent director's system. The governance structure influences the independent director's system, and setting up independent director's system can improve the governance structure. We must promote the governance structure while improving the independent director's system, only in this way, we can improve the quality of listed companies, and the independent director's system could play a positive role in our country.