Study On Financial Restatements Of Chinese Listed Company

The accounting information disclosed by listed company is vital important for the capital market. Because it determines whether the capital market can normatively work with high efficiency or not and it is also the major source for information users to obtain information. In recent years, the phenomenon of financial restatements in listed company occurs frequently and involves in many industries, the restatement covers a wide range of content. More than half of the restatements affect the profits, from which we can see that problems as lack of standardization exist in the financial restatements of China. Financial restatement refers to the behavior of revising or restating the financial report voluntarily or under the requirement of external enforcement for there is some errors in the previous financial report that published by the listed company. As the capital market in China is gradually becoming mature, the relevant users of accounting information come up with higher requirements for the quality of the disclosed accounting information. However, the occurrence of financial restatement lowered the reliability. As a result, the investor can not make a correct investment decision and it also brings negative effects to the resource allocation in the capital market. Therefore, it has strong theoretical and practical significance for us to study the phenomenon of financial restatement, to have an in-depth analysis of the reasons behind the financial restatement and improve the financial restatement system.In the beginning of the paper, it introduces the background and significance of the research, reviews the scholar’s research literature at home and abroad that is related to financial statements. At the same time, it illustrates the research idea and method of the paper. The main body of this paper is divided into four parts as follows:The first part briefly introduces the basic theories of financial restatement. On the basis of the definition of financial restatement at home and abroad, it redefines the meaning of financial restatement and briefly summarizes the features of restatement, the basic theoretical knowledge, the embodiment of financial restatement at home and abroad, the economic influence that the financial restatement has brought to the market and the existing problems of financial restatement in the A share market in China. The second part makes a statistics of the published financial restatement announcement of the A share market in China in recent years and analyzes its current status on this basis. The content of the analysis involves with the tendency of the quantity changes of the restatement announcement, the content, classification and the industry distributions etc. The third part organizes and makes a statistics of the reasons for the occurrence of the financial restatement in the A share market in recent years and have an in-depth analysis of the frequent occurrences of financial restatement in China. The forth part proposes some suggestions as how to improve the financial restatement system in China based on the previous analysis of the previous three parts.Innovative Points:The research method of the previous study on financial restatement issues is demonstration oriented and the aspects of the study mainly based on the market’s reaction to the financial restatement and the economic consequence that brought by financial restatement. The paper uses the research method that combined the normative analysis and statistic analysis and makes an in-depth analysis of the frequent occurrences of financial restatement in Chinese market. Based on this, it proposes some corresponding suggestions for the improvement of the financial restatement system in China to reduce the occurrence of financial restatement. Meanwhile, in the aspect of data selection, for considering there are no specific regulations in financial restatement in China before2003, it selected the restatement announcement published by listed company in the A share market from January1,2004to December31,2012as the object of the statistic analysis, which involves with many different years and covers a wide range, besides, industries as financial industry are also included, which makes the study more comprehensive and reliable.Study limitations:In manual collecting, organizing and analyzing the restatement announcement, some of the information may be neglected for the deficiency of individual’s subjectivity, which affected comprehensiveness of the study. Because the research method is the combination of the statics analysis and normative analysis, there will be insufficient data to support the in-depth analysis, which may leads to the proposed countermeasures too extensive.