Studies On The Relationship Of Accounting Information Quality, Corporate Governance And Corporation Performance

Accounting Information Quality (AIQ) is one of the major concernspuzzling economic development. As we can see the destructive impact somerecent accounting scandals have made to the economy, we make reflection on theorigin of accounting information distortion, urgently hoping to change thephenomenon. Academic focus is being shifted from accountants and accountingitself to relevant interesting parties such as managers and policy-makers.The gradual maturity of the Corporate Governance theory established basisfor the research on the interaction of Corporate Governance and AIQ. On onehand, accounting information has the governing feature, can provide effectiveinformation for Corporate Governance, and then influence the economy indirectly.On the other hand, good Corporate Governance means high accountinginformation quality. Furthermore, bad corporation performance is usually thoughtto have more finance malpractice incentives. Thereby it is a new roadmap toimprove AIQ by investigating how corporate governance and corporateperformance influence AIQ.To research on AIQ, measurement of AIQ must be ascertained firstly. Thereare all sorts of evaluation methods in this area, but many of them areimpracticable as China dropped behind relatively. What's more, taking intoaccount of the nature of China AIQ question, it is recommended to choose thefinancial report failure measurement, which is to judge AIQ on weather financialreport contains fraudulence.Secondly, according to the methodology of both theoretical analysis andpositive analysis, relationships between corporate governance, corporateperformance and AIQ respectively can be evidenced by each other and morepersuasive. Corporate governance can be divided into two categories, one theinternal governance and the other external governance. When studying therelation of corporate performance and AIQ, we can start from bad performancecompanies' motivations of malpractice to assess its impact on AIQ. Through theanalysis of distressed companies' motivation of distortion, bad performingcompanies have more incentives to distort their financial report. In the positive study, the two elements (corporate governance and corporate performance) mustbe quantified for evaluation. Stock structure of corporate governance and threeother indexes including board, shareholders' meeting and surveillance committeepreferably embody the mechanism of corporate governance. Profitability is agood measurement of corporate performance in our economy environmentmeeting our needs.Financial report failure analysis has been utilized when positive studyingcorporate governance and corporate performance's effects on AIQ.Thecondemned fraudulent companies of recent 7 years by CSRC are samples, pairedsample test, non par test and logistic regression being tools for positive analysis,to validate our previous hypothesis.Conclusion lies in the following: corporate governance and corporateperformance affect AIQ remarkably. About corporate governance, fraudulentcompanies has a higher proportion of state-owned share and legal person share,less circulating share, decentralized shareholding, probably exists state ownedasset regulation bureau in biggest 3^rd shareholders. The board and thesurveillance committee do not play their parts in supervision of AIQ. BadCorporate Governance and low Corporation Performance easily induce financialfraudulence. Finally, Corporation governance of distressed companies must beenhanced and optimized in order to resolve accounting quality distortionsignificantly.