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Analysis Of The Relationship Between Controlling Layer Of Actual Controller Of The Listed Company And Eamings Quality

Posted on:2014-02-26Degree:MasterType:Thesis
Country:ChinaCandidate:H Y LiFull Text:PDF
GTID:2249330398491263Subject:Accounting
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Nowadays,investors are paying more attention to the accounting earnings indexwhich as a company’s operating performance indicator in a period.Therefore,based onabundant information in the capital market,accounting earnings is becoming a primaryinformation index to evaluate enterprise.La Porta,Lopez-Silanes and Shleifer concludedthat the actual controller could be recognized through the controlling layer,and theactual controller can influence the company performance through the controllinglayer,which will affect the company’s earnings quality.They have created a newresearching field of the actual controller.In China,the ownership structure is relativelyconcentrated.Especially under the share-split reform background,the actual controllercould pose an influence on the disclosure of financial statement information through thecontrolling layer easily which affects the earnings quality of the listed corporation aswell.Because of the distinctive capital environment,the controlling layer of actualcontroller is long-winded generally which resulting in overstaffed,losing control of themanagement controlling,low efficiency of decision making,increasing costs of themanagement,reducing the competitiveness,receding the earnings quality,even being ansignificant reason for the loss of assets of Listed Company.Therefore,SASAC issuedThe guiding opinion of solving the relative problems of cleaning up and integrating thecentral enterprises and reducing the layer of corporate management in order to solvethe problem of the over-long controlling layer on June,2004.It has a requirement that thecentral enterprises corporate should cut their management layer to3layers or more thanbefore the end of2005.After the issue,a number of central enterprises has cleared andintegrated their enterprise which reducing the controlling layer and also improving theearnings quality.The special institution background in China provides a goodopportunity for researching the correlations between controlling layer and earningsquality.On the base of Agent Series and Allocation Resources,firstly this paper discuss thedefiniton and classification of controlling layer.Secondly,this paper select empricalevidence of the manufacturing industry which start2007to2010,containing2769listedcorporations.Thirdly,according to ownership property of actual controller,this paperdivide the sample into the state-owned listed company and the private listedcompany.Then,to study carefully about how the administrative levels affect theralationship between controlling layer and earnings quality,this paper put the sample ofthe state-owned listed company into two parts:the central-owned listed company and the local-owned listed company. At last,this paper can compare the different classificationto study whether the controlling layer of different ownership property has the sameeffect on earnings quality.As a result,all has make a contribution to finding theappropriate controlling layer for our listed company and assisting to optimizing ourorganization structure,improving the efficiency of allocating the marketresources.China’s special institutional background provides a good opportunity forresearching the correlations between controlling layer and earnings quality.The paper uses the modified Jones model to calculate the discretionary accrualsand use the absolute value as the measurement index of earnings quality.Based on thethe actual controller on2004,the paper count the layer by hand,and then establish theregression model according to the requirements of the theory assumption.To study therelationship between controlling layer and earnings quality could obtained by multipleregression analysis from the result of SPSS and EXCEL software.The results show thatthe more long controlling layer of the actual controller,the more low earnings quality.Italso proves that the actual controller has a greater possibility of hidden negativeinformation using the complex controlling layer which will reduce the quality ofearnings.Comparing the state-owned company to the private company,the paperconcluded that the intention of obtaining profit in the state-owned company is less thanthe private company which based on the nature of ownership classification.Themanagers are designated by the state which makes them very difficult to seek privatebenefits through the occupation of funds.Then,comparing the central state-ownedcompany to the local state-owned company,the research proves that the central-heldcompany earnings quality will be improved by the increase of the controllinglayer.However, the earnings quality of the local-held company will be reduced by thecontrolling layer’s increase.Finally, the paper puts forward related suggestions:thecontrolling layer’s restructuring will help for cleaning and integrating enterprises andmarket resources’ allocation;to balance the power of the actual controller could make acontribution to the regulation of the actual controller,such as to increase the number ofindependent directors;also,it is helpful to consummating the management system of thestate-owned assets,improving the earnings quality of the state-owned company andspeeding up the efficiency of the resource allocation in capital market.
Keywords/Search Tags:Actual controller, Controlling layer, Earnings quality
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