Research On The Relationship Between Financial Restatements And Corporate Governance

As one of the most central elements of capital market allocation of resources, the quality of accounting information plays a vital role to protect the interests of investors. It can be said that high-quality accounting information is an important condition and the basic guarantee for normal operation by the modern capital markets. In all kinds of accounting information, the financial report is undoubtedly an important way for investors to understand the financial and operating situation of the listed companies, Therefore, the quality of financial reporting information has been cause for great concern. However, in recent years, the phenomenon of financial restatements is more and more serious in both domestic and international capital markets. The so-called financial restatement refers to the behavior which enterprises correct errors in the financial accounting report of the previous accounting period and restate financial information. Listed companies carry on the financial restatement on the means that the previously announced financial report has errors and omissions and it also indicates that the quality of accounting information is less than ideal. What’s more, if the financial restatement is not caused by objective reasons, but deliberately caused by the listed companies, the financial restatement may relate to financial manipulation, earnings management, financial fraud and so on.The occurrence of financial restatements has profound reasons at the corporate governance level. This paper focuses on which corporate governance characteristics relates to the probability of occurrence of financial restatements and the direction of influence. Firstly, the paper does some reviews and combings on the research status at home and abroad. Then, from the institutional background of the financial restatement, combined with the basic principles of corporate governance and disclosure of financial information field, we research the financial restatements and corporate governance normatively. Then coming to the focus of the article, we use descriptive statistics, paired T-test, univariate correlation analysis, and Logistic selected regression model to test the relationship between the restatement and the corporate governance empirically, according to available empirical data of listed companies. Researches have shown that the probability of occurrence of financial restatements has relationship with the state-owned share, the proportion of legal person shares, the proportion of tradable shares, the board of supervisors scale, the board size, but has not significant relationship with the proportion of state-owned shares, investors holding, board independence. Lastly, the paper departures from the research findings, combined with China’s actual situation and put forward some ideas and proposals to improve the corporate governance structure and the quality of financial information disclosure.