Ultimate Controlling Shareholder And Accounting Conservatism

The quality of accounting information has been a thorny issue. Since theestablishment of China’s securities market, the listed company’s financial scandals havebeen repeatedly exposed, and quality of accounting information is not optimal.Therefore, in recent years, as the U.S. subprime mortgage crisis broke out and the globalfinancial crisis expanded, the fair value has been questioned in the economic sector. Thesoundness accounting principle has once again become the focus of economic circles,especially for the accounting academic. While there is in-depth extensive research onaccounting conservatism, from a perspective of departure pyramid ownership structurethat is relatively new, this paper analyze the ultimate controlling shareholder’s impacton accounting conservatism. In the ultimate controlling shareholder, this thesis will becharacterized by the cash flow rights and control rights, separation of two rights, thetype (divided into government and non-government and the central government andlocal governments) as an analytical dimension, respectively, and explain its listedcompanies of the impact of accounting conservatism. In today’s capital markets,especially in emerging and developing capital markets, equity does not appear highlyfragmented. On the contrary, the degree of concentration is quite high. In this thesis,selected focus was more common form of equity ownership structure of the pyramid asa starting point, since the pyramid complex shareholding structure itself which istrue.The ultimate controlling shareholder will be widely used in the form of equityinterests of minority shareholders outside encroachment to avoid being discovered. Atthis point, the whole idea of this paper as well as overall research objectives are formed.In this thesis, using normative research and empirical research combining researchmethods and focusing on the conditions of the pyramid ownership structure, theultimate controlling shareholder of listed companies characterized the impact ofaccounting conservatism. As the ultimate controlling shareholder increased proportionof cash flow rights, the interests of listed companies with more convergence behavior ofsmall shareholders occupation will be suppressed to some extent naturally. They takeearnings management accounting conservatism weakened greatly and reduce thepossibility. Its control over the flow ratio and a range of different control interval meansthat the listed company has a corresponding control over. The paper will be divided into three different control over the flow range, namely the control group or the relative thecontrol group and the absolute control group. With an enhanced control of the listedcompany’s accounting conservatism gradually weakening, two degrees of separation ofpowers is a more comprehensive interpretation of the ultimate controlling shareholderof the encroachment angle minority shareholders behavior. Two rights to increase thedegree of separation means that the ultimate controlling shareholder of the occurrenceof acts of encroachment price paid will be reduced, which will provide it with greatermotivation occupation. However, after the occupation, in order to hide their actionstaken as surplus management and other means, and ultimately weaken the listedcompany’s accounting conservatism. Therefore, the variety with the accountingconservatism will show negative correlation. This paper will be divided into two typesof ultimate holding groups. One group is the government-controlled group andnon-government-controlled group. The study found the government-controlled grouprelative to the non-governmental groups will strengthen the control of listed companiesaccounting conservatism. The other group is the central control group and local controlgroup, the control group will be expected to help strengthen the central accountingconservatism. However, empirical results did not reach the same conclusion.As the pyramid ownership structure of the accounting conservatism impact studies,this paper put the level of the pyramid ownership structure as an explanatory variable.As the ultimate controlling shareholder of the original purpose of this structure isconcealed its embezzlement, more complex ownership structure of the pyramid, themore motivated they invaded, the minority shareholders, and thus the public companyaccounting conservatism deeper extent of the damage. In assessing the complexity ofthe pyramid ownership structure, this thesis choose alternative hierarchy pyramidownership structure as a variable, and find that levels and accounting conservatism isnegatively correlated.