An Empirical Study On The Relationship Between The Executives’ Background Characteristics And Earning Quality

The 21st century, disclosed earnings information quality of listed companies has received the unprecedented challenge because of the he outbreak of a series of major financial scandals at home and abroad.Problem in our country is especially serious, this may be associated with imperfect capital market in China.To explore the intrinsic reason, however, the manipulation of the surplus by company’s top management leads to most of these financial scandals. Due to the separation of ownership and control in modern incorporated enterprise, senior management team as a manager of the company plays a leading role in the company’s major business matters and decision, their background characteristics will affect the strategic choice and behavior decision-making, so as to impact on earnings quality. Therefore, from the perspective of executive background characteristics to explore the potential relationship between earnings quality is conducive to improving the corporate governance and supervision system.In this paper, starting from the present situation of our capital market, by analyzing existing literature of executive team background characteristics and the earnings quality, using the qualitative analysis with quantitative analysis, standardized research and empirical research on the method of combining with upper echelon theory, team theory, human capital theory and related theory as the foundation, choose deep households two city from 2012 to 2014 A share manufacturing listed companies as research samples, in-depth study of the listed company executive team background characteristics impacting on earnings quality. In empirical study,this paper selects the academia widely recognized modified Jones model to measure the earnings quality, proportion of male executives, senior age, education level and executive tenure as explanatory variables, the first big shareholder’s stake, asset-liability ratio, proportion of independent directors, earnings per share as control variables for multiple linear regression, inspect background characteristics of the listed company’s senior management team on the earnings quality. The results show that:(1) senior male proportion and earnings quality has significant negative correlation relationship; (2) average age of executives has significant positive correlation with earnings quality; (3) the average education level of executives has significant positive correlation with earnings quality; (4) there is no significant correlation between the earnings quality and executives term number.In this paper, the empirical results indicate that the applicability of the upper echelon theory on Chinese capital market. On the basis of regression analysis, this article also puts forward the following suggestions from perfecting corporate governance, strengthen internal human resources management:(1) in terms of executive hiring, emphasizing on gender, age and level of education, strengthen the executive education, create a good atmosphere of top management; (2) Perfect the corporate governance, promote company legal operation; (3) strengthen the supervision of the company, the earnings quality as assessment indicators.