Empirical Studies Of Ultimate Control And Earnings Opacity Impact On The Management Agency Costs

With the development of capital markets, executives excessive consumption ofduties, corruption, embezzlement of public funds, transfer of company assets, withmoney to flee the phenomenon, common in listed companies, the informationasymmetry between shareholders and executives, the responsibility does not such asmore obvious each day, internal control supervision mechanism unreasonable causean increase in the management of agency costs. Management agency cost was theresult of internal management and outside investors to pursue the interests ofinconsistency, corporate ownership and operation of the phase separation, resulting inthe value of the business cannot be maximized. At the same time, the managers oflisted companies in the capital market, frequent manipulation of earnings, incomeinformation distortion serious,“Qiong Ming Yuan” source to “Yin Guang Xia” and“GF backdoor”, a series of financial fraud and in the capital market, a seriousinfringement of Chinese securities market “open, fair, equitable” principle. Ultimatecontrolling shareholder of the pyramid holding cross-shareholdings, dual holding hasde facto control of listed companies have a major impact on the day-to-day operatingdecisions of the company’s senior management and the company’s incomeinformation disclosed. Therefore, this article from the two perspectives of theultimate control and revenue transparency to study reducing management agency costfactorTsh aef fpecutripnogs.e of this study intends to solve the following problem:(1) Listedcompanies with the increase in the proportion of the ultimate controlling shareholder,the management agency costs is followed by increased or decreased?(2) Othercontrolling shareholders to raise their stakes in listed companies on the checks andbalances role played by the largest shareholder, can effectively control managementagency costs?(3) Radical using the income and benefits of smoothness index as ameasure of earnings transparency, can be able to find the root causes of management agency costs?The structural framework of this paper consists of six parts: The first chapter onthe ultimate control over the research background and significance of the relationsbetween earnings transparency and management agency costs, and proposed thecontribution made by the Department. The second chapter is a detailed exposition ofthe ultimate control over, revenue transparency, management agency cost literature.The third chapter described the theoretical basis section and made a researchhypothesis. Chapters4and5areas of this study, an empirical test, is also the authorintends to solve the problem, through the screening of sample data, the variablemodel, the empirical results and robustness of the test, get the sixth chapterconclusions:(1) The ultimate controlling shareholder stake increase will inhibit themanagement of the behavior of the occupation of the interests of shareholders, toreduce management agency costs;(2) Checks and balances of the other controllingshareholder of the largest shareholder and did not make effective control of themanagement agency costs, the possible causes of the other controlling shareholder ofthe largest shareholder and not to play a supervisory role, but more friction due tointernal shareholders.The cost of leaving the management of agency costs increase;(3)The earnings radical and earnings smoothness metrics as revenue transparency, salesmanagement expense ratio as a measure of management agency costs, theperformance of managers in order to whitewash the company’s operatingperformance, with earnings acceleration confirm, the cost to postpone the date of theconfirmation the tendency to make the sales management fee rate, and indirectlyreduce management agency costs, this phenomenon indicates that managers smoothprofits, gloss over the motives of the financial statements more, the interests of thecompany may be invaded and occupied by other means, to pursue their own privateinterests.In this paper, the internal problems of policy recommendations:(1) Listedcompanies is necessary to improve the regime for disclosure of income information toimprove the quality of earnings disclosure;(2) The relevant regulatory authorities todisclose income information on listed companies to intensify supervision;(3) Listedon the rational allocation of the ownership structure of enterprises.