An Empirical Research On Correlation Between Agency Conflicts, Corporate Governance And Earnings Quality

Along with the vigorous development of the securities market, earnings quality problems of the listed companies are brought to the attention of scholars both at home and abroad. Corporate governance as one of the most important aspects, it had a great impact to earnings quality. Existing research mainly is certain aspects of corporate governance on the influence of the earnings quality, it’s difficult that comprehensive level of corporate governance can be and how to affect earnings quality get the exact conclusion. For this reason, this paper use appropriate methods to study the influence which the corporate governance level on the earnings quality. In addition, unreasonable corporate governance structure can cause larger agency conflicts; the degree of agency conflicts directly affects the company’s agency cost. This paper holds that different degree of agency conflicts can make different influence that the corporate governance level on earnings quality. Therefore, this paper will unify agency conflict, corporate governance and earnings quality in together, and research the relationship between the three.Based on the research methods combination of the normative and empirical, this paper is divided into five chapters. First of all, based on the related literature were reviewed, this paper summarize the current situation of the study, and elicit the theme. Secondly, with the normative research method, this paper further researches the theoretical connotation of principal-agent, corporate governance and earnings quality; at the same time, it theoretically analyzes the correlation between the three. Then, according to the theory analysis, this paper puts forward three research hypotheses; and it designs the empirical research using listed companies’ experience data of2008-2010years and using the fixed DD (2002) model to measure earnings quality. This paper tests the correlation between the three from two aspects:On the one hand, test the correlation between the corporate governance level and earnings quality; on the other hand, it test that in different degree of agency conflicts, the corporate governance level of high and low has any different effects on earnings quality.The conclusions of this paper as following:Firstly, the corporate governance level can affect earnings quality, the higher level of corporate governance, the higher the earnings quality. Secondly, different degree of agency conflicts can affect the correlation between the corporate governance level and earnings quality. When agency conflicts in the higher degree, increase the corporate governance level can significant improve earnings quality; when agency conflicts in the lower degree, increase the corporate governance level can not significant improve earnings quality.Lastly, based on the empirical conclusions, this paper proposed superficial recommendations of reducing agency conflicts, perfecting corporate governance mechanism and improving earnings quality.