Ultimate Ownership Structure, Inverstor Legal Protection And Accounting Restatements

With economic globalization and the information transparency, financial statement of listed companies is one of the important information of grave concern to investors and researchers. But in recent years, referring to the annual financial reports of listed companies, they have become more frequent restating of accounting earnings information. Restate earnings information of the listed companies is increasingly being used to whitewash report information means. In this case it will not only harm the interests of the country, minority shareholders and creditors, but also affect the development of their own businesses.Many factors affecting the probability of accounting restatements, which corporate governance plays an important role. As the domestic research on the ultimate impact on the accounting restatement ownership structure is basically blank, to delve into issues related to this area, and to take effective measures, has its practicality and urgency. While studying accounting restatements of listed companies, it is necessary to combine the market and legal environment in China, as China has a special market and legal environment. Different levels of financial development in different regions, different legal environment, they all have significant impact on accounting information disclosure and restatement. On the one hand, referring to the massive domestic and foreign research literature, this research summarized the achievements and shortcomings of accounting restatements, meanwhile refined the previous research conclusions. On the other hand, based on agency cost theory, we consider some factors such as China’s legal environment and ultimate ownership structure of listed companies in China and conduct a comprehensive analysis of the relationship between accounting restatements.Selected from 2008 to 2013 in the non-financial companies listed on the Shanghai and Shenzhen A-share as samples, after a series of data processing, this paper got in a total of 985 companies (5,910 observations) panel data. Then, in the case of control variables, applied Logistics model, this paper examined ultimate ownership structure and empirical relationships between accounting restatements, ultimate ownership and control the degree of separation and the relationship between accounting restatements, as well as the different legal environment impact on the accounting restatement.This paper find (1) the ultimate controlling shareholder of the company’s cash-flow rights and corporate accounting restatements significantly negatively correlated. (2) the ultimate controlling shareholder of the company by separation between control and cash flow rights and corporate accounting restatements a positive correlation. (3) ultimate controlling shareholder is compared to the non-State-owned holding company, the ultimate controlling shareholder of listed companies are State-owned, its accounting restatements significant increases in the incidence. (4) the level of legal protection of investors and the company is positively related to accounting restatements. (5) if the company is in a sound legal environment, the separation of control and cash flow rights and accounting restatement probabilities of a positive correlation was not significant. If the listed companies are not a sound legal environment is the separation of control and cash flow rights and probability of occurrence of a positive correlation between accounting restatements. Legal environment good, inhibit occurrence of accounting restatements.Finally, based on the findings this paper put forward policy recommendations of the corporate governance of listed companies and on the improvement of China’s legal system environment. This research contributes to promote the expansion of accounting restatement. This paper has some practical meanings for the regulation of accounting restatement, the protection of the lawful rights of investors, the improvement of the capital operation efficiency, the improvement of governance structure, the reform of company and the allocation optimization of resources. It also has theoretical meanings for the academic area.