An Empirical Study On The Influence Of Institutional Environment And Large Shareholder’ Controlling On The Financial Restatement

For a long time,market supervision department and the academic circles focus onthe quality problem of listing Corporation’s financial report. The financial restatement isfinancial disclosure of major errors or omissions in the the early report, generally in theform of announcement.From the whole world, the financial restatements is gettingmomentum.The listing corporation may manipulate profit for the purposes of rationedshares and additional shares, the manipulated financial report is published first,and thenrestate. So the financial restatement in Chinese securities market means that manylisting Corporation’ information in early financial report did not reflect the real situationof the company, so the financial restatements will damage the interests of investors andhinder the allocation of resources.The financial restatements has become an importantissue of corporate governance and capital market research.This paper reviews the research status of financial restatement, the control of largeshareholders and institutional environment at home and abroad, and then elaborated therelated theory and research background.On the basis of theoretical analysis, this paperchoose financial restatements from2009to2011of listing Corporation and its matchingcompanies as the research sample, using Logistic regression model, discusses theimpact of the control of major shareholders to the financial restatement behavior undercurrent institutional environment in China.In the base of controlling some indicators,such as the the proportion of independent directors(Independent),the asset-liabilityratio(Leverage), turnover of total capital(Turnover)and the year(Year),we intend toinspect the influence to the financial restatement from the process ofmarket(Market),cashflow of Large Shareholders,the excess of cashflow rights andvoting rights,the nature of shareholder and so on.Practical test results show that Large shareholders’ controlling is normal in listingcompany, cash flow rights and the occurrence of financial restatements has significantnegative correlation, the degree of separation of cash flow rights and control and theoccurrence of financial restatements was significantly positively related,financialrestatement are more likely to occur in the listed companies under the control ofNon-state-owned shareholder.The institutional environment has important influence onfinancial statement,the listed companies in high marketability level region,its financialrestatements are less likely to occur. And further,we found in the higher marketization region,the positive relationship between the separation of cash flow rights and controland the occurrence of financial restatements is weakened.This study can improve the quality of disclosure information, provides atheoretical basis to improve the listing Corporation internal governance structure andoptimization of the external market environment, but also provide a meaningfulreference or policy departments to formulate relevant policies.