Family Control、Auditing And The Transparency Of Information Disclosure

As a leading economic organization, family business accounts for a large proportion of the world economy. In China, State-owned economy has the dominant position in the economy, however, since the reform and opening up, the private economy seizes the good opportunity to grow up quickly and has become an important component part of China’s national economy.With the family development of family business and the improvement of capital market, many family businesses get evolution through absorbing public capital and professional managers. On the one hand, the family business can reduce agency costs and supervise the administrant more effectively. On the other hand, it brings another agent problem between controlling shareholders and minority shareholders especially when the controlling shareholders own far more control rights than cash flow rights, because the controlling shareholders have big motivation to infringe upon the benefit of minority shareholders when they own enough control rights of the family listed company. In this case, the controlling shareholders may disclose less information avoiding the supervision from other shareholders and public, particularly in our country with poor shareholder protection.Family controlling and external auditing have a significant impact on transparency of information disclosure of listed company, although it is not clearly how do they work in the process. But the perfect situation must be combining of interior corporate governance and exterior corporate governance. Based on a Sample of companies listed at Shenzhen Stock Exchange from2008to2010, this paper explores the relation of family control、auditing and the transparency of information disclosure in listed company, aiming to discuss how do the family controlling affect on the information disclosure, and may the auditing can reflect or improve the information disclosure of listed family company. The main results are summarized as follows:(1)The relation between the cash flow rights and the transparency of information disclosure is not clear, which need farther research.(2)The relation between control right and the transparency of information disclosure is showed as a shape of reverse U. When the control rights is very low, the transparency of information disclosure will get better as the control rights goes higher. But when the control rights has come to a certain degree, the transparency of information disclosure will become worse as the control rights goes higher.(3)The separation of cash flow right and control right will negatively influence the transparency of information disclosure.(4) When the family controlling shareholders or someone acting in concert take in charge of board chairman and general manager at the same time, the transparency of information disclosure of listed family company will be worse.(5)The big4international accounting firms and big4domestic accounting firms can not improve the transparency of information disclosure of listed company.The innovations of this research are as follows:(1)Based on the family listed companies, the paper is not only pay attention to the relation of interior corporate governance and transparency of information disclosure, but also pay attention to the auditing as external corporate governance.(2)The paper chose the data up to date for research, so the results may be more persuasive.Of course, there are many contents need to improve and modify such as:(1)The samples are not enough. In fact, the different stock exchange may get different results.(2) It is so important in empirical research that how to define the transparency of information disclosure.(3)The paper take the big4international accounting firms and big4domestic accounting firms for higher auditing quality, which may be not enough scientific.