The Characteristics About Control Rights And Extraordinary Items Of Chinese Private Listed Companies

With the development of Chinese reform, private economy attains a favorable environment for the development, private enterprise has been made significant development in the recent decades. Modern enterprise management system has been applied to the private enterprises, and many private enterprises develop into listed companies. With the development of financial markets, the number of the private listed companies is growing. With growing of the company, the problems of management are also increasing. Earnings management became the widespread phenomenon of the listed companies. It is necessary to study extraordinary items, because extraordinary items have become the primary means of earnings management in the listed company.Currently the study of extraordinary items generally focuses on the overall of listed companies or lose-making companies, only a little research is study for private listed companies. As the ownership of Chinese private companies has a special nature, property rights, equity, private companies have a special issue of governance and motivation of earnings management. To study the characteristics of shares and controlling right of private listed companies and the influence on extraordinary items has important theoretical value and practical significance on matter on market supervision and on decision-making.By reading many classic literatures about earnings management, extraordinary items, ownership structure of private listed companies, this paper makes a groping research on characteristics about private control of private listed companies effecting extraordinary items which is based on the former studies. This paper regards all the private listed companies except financial companies of Shanghai and Shenzhen bourse from the year 2007 to 2008 as the sample, adopts the methods of descriptive statistical analysis to prove extraordinary items taking the great proportion of net profit, adopts the methods of frequency distribution to prove private listed company using extraordinary items to adjust the profit, takes the largest proportion of shareholding, separation quantum of ultimate cash-flow rights and ultimate control rights, debt ratio to scale the effect of control rights on extraordinary items, establishes multivariate regression models, adopts the methods of regression to verify the impact of the largest proportion of shareholding, separation quantum of ultimate cash-flow rights and ultimate control rights, debt ratio on extraordinary items.From the empirical analysis, this paper finds that private listed companies more generally manipulate the time and intensity of extraordinary items to make earnings management. The largest proportion of shareholding, debt ratio has a great impact on debt ratio, there are inverted U-relationship between extraordinary items and the largest proportion of shareholding, private listed companies have the higher debt levels, the greater extent of using extraordinary items. According to the discovered problems in the empirical analysis, this paper put forward several pertinent suggestions that improving the accounting standards system, improving the internal governance institutions, strengthening development and implementation of equity rights, strengthening the actual controller of the compulsory information disclosure, accelerating the development of institutional investors.