Study On The Influence Of Board Characteristics On Financial Restatement

Financial restatement is an expression of listed company financial reports to early. To some extent, it means that the information disclosure of listed companies is not perfect. And it even exposed the problems in corporate governance. Especially, some listed companies use financial restatements to manipulate earnings, whitewash financial data, hide the insider trading, which caused huge losses to investors and serious shook the investors’ confidence. However, according to the samples of this article, financial restatement phenomenon in listed company is increasingly severe in recent years. The proportion of the restatement companies of all selected sample companies rapidly grows from12.51%in2010to16.41%in2012. So, financial restatements phenomenon should cause the attention of all sectors of society and need their value.The board of directors is the core part of the company’s internal governance. It need to supervise over managers, control, evaluate and provide the function of consulting, and ultimately be responsible for the company’s operation. The board of directors needs to supervise over the routine activities of business management, to ensure that the company provides financial information is reliable. So, company’s financial reports and related announcement are required to pass through the examination and approval of the board of directors.In theory, the board of directors owning to its importance in the corporate governance, could inevitably have impact on financial restatements. However, in practice, whether there is relationship between them? If there is, what’s the relationship? Therefore, this paper attempts to use the empirical study to find whether there is any relationships between the the board of directors and the financial restatements from the perspective of corporate governance.This paper is composed of five parts. The first part is the introduction of background, significance and methods, summarizing the main view of researchers. In the second part of this paper, financial restatement and characteristics of the board are defined, and the relationship between the board characteristics and the financial restatement is described using principal-agent, resource dependence and asymmetric information theory. The third part is the mechanism analysis, based on financial restatement system and the status quo, deeply analysis of the mechanism on the impact of board characteristics on financial restatements. Then, this paper selects2010-2012A-share listed companies as samples to measure the board characteristics from seven aspects. The empirical results show that board size, both set up situation, the number of annual meeting of the board and the chairman of the ownership are significantly positive related to financial restatements. The board ownership is negatively related to financial restatements. And the proportion of independent directors and the special committee have no significant correlation with financial restatements. The last part is the conclusion of this paper, number of recommendations for the conclusions and the direction for further research.Innovations and features in this article are:1. Approach Innovative. Research on financial restatement of the existing literature mainly focuses on the motivation and economic consequences, and rarely on the factors to financial restatement. This paper starts from the perspective of corporate governance to explore the influence of the characteristics of the board of directors of the listed company on financial restatement. It will enrich the research of financial restatement in our country, broaden the research Angle of view and has a certain novelty.2. Empirical content Innovation. This article selects2010-2012A-share listed company as the research object, and deeply researches the financial restatement in the samples from different aspects such as the annual, regional, industry and stock market. And the article also puts forward the corresponding suggestions to further understand the actual situation of our country listed company’s financial restatement phenomenon, and provide the reference and revelation to strengthen effective regulation and improve the quality of financial information disclosure.