A Study On The Relationships Among Quality Of Accounting Information, Agency Cost And Firm Performance

Accounting information is the information that the company conveys the financial position, operating results, cash flows and other information to investors, governments and other stakeholders through the financial reports. However, due to the information asymmetry and selfish needs of managers, they will manipulate earnings or related information. These behaviors will result in that the quality requirements of accounting information can’t be reached and agency cost will be increased. With the development of China’s capital market, the need of external stakeholders on high-quality accounting information is gradually increasing. However, problems of the fraud of financial statements, inadequate disclosure of accounting information and timeliness are quite seriously. From the early stock market issues (eg. Joan Min Yuan, Yin Guang Xia) to recent accounting fraud cases(eg. Hang xiao, Hai na and Lv da di), we can see the grim situation of our listed companies according to accounting information and agency issues. To some extent, interests of investors can be damaged by the financial fraud. Besides, the development of capital market can be hindered. Therefore, how to improve the quality of accounting information has become a long-concerned topic in theoretical and practical field in order to make it play a full role in corporate governance and reduce the probability of agents. Finally, it can promote the development of the entire capital market of China healthily and orderly.Based on above, on the basis of existed literature by scholars at home and abroad, by using principal-agent theory, asymmetric information theory, contract theory and the theory of rent-seeking, selecting2003-2011all non-financial listed companies from the Shanghai and Shenzhen Stock Exchange as a sample, this thesis try to study on the relationship between the quality of accounting information of listed companies, agency cost and corporate performance under the institutional background of China’s economic transformation. The results show something as below. First, to some extent, increasing the disclosure of accounting information can effectively alleviate the degree of information asymmetry between managers and shareholder-oriented investors and enhance investor confidence. Second, by improving corporate transparency, high-quality accounting information can make investors be able to make more effective business assessment, and thus help to improve corporate performance. Finally, the accounting information reduce the company’s proxy costs through its pricing function and governance functions, and then indirectly improve the performance of the enterprise. Moreover, with the common profit index-ROE as an alternative variable to company performance, robustness tests can be carried out to enhance the conclusions convincingly.It’s an effective way to help companies improve performance by improving the quality of accounting information visibly. Therefore, cultivating institutional investors can optimize the ownership structure of listed companies. Improving the independent director system, strengthen the management of ethics and professional knowledge education are helpful to increase the reliability of accounting information. Supervision and incentive management should be enhanced through the construction of accounting standards and system in order to improve the channel of information sources. These methods will fundamentally improve our quality of accounting information. However, due to my limited research level, the measurement results may appear a little bias. For example, some errors exist in data processing. For example, in the measurement of earnings quality, there is no reason to distinguish between its causes, further subdivided may be considered in order to determine the correlation between the quality of accounting information, agency costs and corporate performance more accurately in the future.