An Empirical Analysis On Corporate Governance And Informativeness Of Accounting

There is a very important relationship between corporate governance and informativeness. On the one side, information disclosure is one important factor of corporate governance, which effect corporate governance thought direct and indirect ways. On the other side, effective corporate governance could be good at improvement of informativeness. Based on the research from the domestic and overseas, this paper researches the effective corporate governance of China, which can improve the quality of accounting information. The paper use the earnings-returns relation of China's listed companies to describe the informativeness, which means if the accounting information could bring the investor the sound anticipation according as the external request of market and could result in responses of stock price in reason. Informativeness reflects the actual degree of the management performance and financial status, and the rational recognition of the market to the information disclosure. The paper gives the hypothesis and empirical tests the influence of the ownership structure, controlling shareholder and other corporate governance to the informativeness. From the empirical results, in the first, we can see the relativity of earnings and return is low, which means investor and manager have remarkable difference in value of company. Second, The results show that ownership held by the top shareholder is U correlated to informativeness. Controlling shareholder, the percentages of the membership of the board of director sit on by controlling shareholder and top management from controlling shareholder are all significantly negatively correlated to informativeness. These results indicate there are Agency problem in controlling shareholder and external investors, which make controlling shareholder have power and motivation to manipulate accounting information. Rational external investors must have suspicion to controlling shareholder, and make "adverse selection". on the other hand, empirical results from big sample show that foreign owned are positively correlate to informativeness. That means the companies, which issue foreign owned have less opportunism behavior to manipulate accounting information because of stricter supervising. Accordingly, the companies, which issue foreign owned can, get more confidence from market investors. More noteworthiness, There has not positively relation between independent boards and informativeness, which result is different from overseas research. Maybe, a relative short history of independent boards and the imperfection of supervising mechanism made the rational investors lose trust in the independent boards.