The Study Of The Relationship Of Family-controlled Listed Company Governance And Accounting Earning Quality On SME Board

Family-controlled enterprises in recent years gradually become an indispensableforce in China’s economic growth. However, due to the imperfections of corporategovernance, these family-controlled listed companies on the SME board face theproblem of further development, is not propitious for the improvement of accountingearning quality. Accounting earning is the most concerned information of the majorityof investors, which will impact the correctness and rationality of investment decisions,and then affect the optimal allocation of social limited resources. Therefore, to researchthe relationship of SME board family-controlled listed companies’ governance andaccounting earning quality is significant on theory and practice.On the basis of full understanding of characteristics of family-controlled listedcompanies’ governance and accounting earning quality on the SME board, this paperselects303family-controlled listed companies on the SME board, which has listedbetween2004and2010as empirical samples, and chooses indexes to factor analysis,getting the composite index of accounting earning quality, then analyses the relationshipbetween corporate governance and accounting earning quality from ownershipgovernance aspect, board of directors governance aspect and senior manager incentiveaspect separately. The study finds that the proportion of family shares, the top fiveshareholders shares and senior manager shares have a U-type relationship withaccounting earning quality; the proportion of outstanding shares and the senior managersalary have a positive relationship with accounting earning quality; the board ofdirectors size have a inverted U-type relationship with accounting earning quality; theproportion of independent directors is negatively correlated with accounting earningquality; the ownership restriction degree and the unity of the chairman of the board andgeneral manager have no significant correlation with accounting earning quality.Therefore, family controlled listed companies on SME board in China shouldproperly solve the separation of family control right and cash flow right, perfectownership restriction mechanism to form the relatively balanced equity structure andoptimize the equity structure to achieve equity diversification on ownership governanceaspect; should moderately expand the size of the board to make the board work moreefficiently, reform the option system of independent directors to strengthen theirindependence and view the issue of the unity of the chairman and general managerdialectically on board of directors governance aspect; should further increase seniormanager salaries and rationally use the executives shareholding incentives on senior manager incentive aspect.