The Influence Of Corporate Governance On Accounting Surplus Value Relevance

In recent years, many corruption cases happened in the famous listed company. Corporate governance has got people’s attention as a social hot issue, and people’s concerns also become more and more detailed, more and more comprehensive. Corporate governance has been evaluated from several aspects. Initially, people are just concerned about the strength of the surplus capacity, and with the continuous research, people pay more attention to the accounting surplus on its quality. One of the most important is its value relevance, which means accounting surplus is associated with investors’ decision-making, which also means accounting surplus has the prediction ability for the future. Then some scholars take the two hot topics together to study, and start to explore how-corporate governance influences the value relevance of accounting surplus.Based on this, this paper chooses the Shanghai and Shenzhen a-share listed companies as data samples, and study how corporate governance influences the value relevance of accounting surplus from the ownership structure, the features of board of directors and management incentive three aspects by return model and price model. Study the representative indicators detailedly to improve the value relevance of accounting surplus by improving the company governance structure.This paper includes the following six parts:The first part is the preface, which introduces the research background of corporate governance and the value relevance of accounting surplus, and comes up with the meaning of studying how corporate governance influences the value relevance of accounting surplus, and determines the research method and thinking, and illustrates the shortcomings.The second part is the literature review, which researches the home and abroad literature about corporate governance and value relevance of accounting surplus, summarizes and reviews the results of their study, and further clears the research ideas of this paper.The third part is the theoretical analysis, which introduces the relevance theories about corporate governance and value relevance of accounting surplus detailedly, and researches how corporate governance influences the value relevance of accounting surplus from theory, and comes up hypothesis.The fourth part is study design, which explains how to select samples and variables and how to construct model on the base of the third part.The fifth part is research results and analysis, which firstly descriptive statistics each variable of model, then researches how the variable of corporate governance influences the value relevance of accounting surplus by regression analysis respectively.The sixth part is research conclusions and policies, which firstly obtains the conclusion of this paper:there is a positive correlation between the value relevance of accounting surplus and ownership concentration, ownership restriction, the proportion of the independent directors; there is a negative correlation between the value relevance of the accounting surplus and the salary of executives; there is a weak negative correlation between the value relevance of the accounting surplus and state-owned share-holding rate; there is a weak positive correlation between the value relevance of the accounting surplus and the size of the board. Then this paper puts forward some relevant policy Suggestions on the base of the results of regression analysis.The innovations of this paper mainly include the following two points:(1) The classical models to study the value relevance of accounting surplus are classical model is return model and price model, though the two models are created from the future cash flow of the discount model, each has its own advantages. Previous researches usually adopt only one of the models, but this paper uses both of return model and price model by regression analysis, and compares the conclusions of them.(2) Previous researches usually just study how the control variables influence reward or price, do not study how the control variables influence the value relevance of accounting surplus, which is more accurate. So, this paper uses product of the control variables, surplus level and earnings per share.This paper also exists some shortages:(1) Corporate governance mechanism includes internal governance mechanisms and external governance mechanisms. This paper only researches the impact of internal governance mechanism on value relevance of accounting earnings.(2) There are so many variables to measure the corporate governance, but because of the limit of the ability and time of writer, just researches some important variables, including shareholding percentage of the largest shareholder, the check and balance from the second to the fifth big shareholders to the largest shareholder, state-owned share-holding rate, the proportion of the independent directors, the size of the board and the salary for the first three executives, therefore, this paper is not quite comprehensive, and needs to be further improved.(3) This paper does not consider endogenous issues, the value relevance of accounting surplus also can influence corporate governance, this paper does not study it, and hopes to research on it further later.