Marketization Degree,Political Connection And The Accounting Information Quality

The accounting information of enterprises plays an indispensable role in the securities market,it is an important way for investors to understand the real business condition of the enterprises,and it is also an important tool for the government to allocate resources.High-quality accounting information is good at reducing the information asymmetry and solving the principal-agent problems,in order to ensure the healthy development of the stock market,it is imperative to provide high-quality accounting information.In the existing literature,the scholars believe that the main factors affecting the quality of accounting information is the enterprise internal financial factors,they rarely focus on the degree of marketization and political association.The degree of marketization will affect the behavior of enterprise through laws and regulations,government intervention,social capital and other factors,the political connections affect the quality of accounting information is mainly by providing preferential policies for enterprises.Our country is in the process of economic transition,most of the economic resources are still controlled by the government,so some enterprises in order to survive and develop,establishing a relationship with the government regardless of the high cost to get the taxes,loans and legal advantages,this will weaken the constraints of tax,loans and legal on accounting information,reducing the quality of accounting information.Based on the above analysis,this paper studies the relationship between the degree of marketization,political association and enterprise accounting information quality.This paper uses the financial data of A share companies from 2008 to 2014,using the modified Jones model to calculate absolute value of discretionary surplus to measure the quality of accounting information,combining social capital theory,effective market theory and rent-seeking theory,using the method of normative and empirical research to examine the relationship between the degree of marketization,the political connection and the quality of accounting information.The study reached the following conclusions:first,the higher the degree of market,the higher the quality of accounting information.The high degree of market means that the smaller role of government intervention in the market,laws and regulations performed more efficiently,the cost of earnings management used by managers to reduce the quality of accounting information is bigger than profit,so the rational managers will not use earnings management to reduce the quality of accounting information.Second,the quality of accounting information of political association companies is worse.Because of Chinese special economic background,almost all economic resources controlled by the government,political connection enterprises can use their government's position gain more scarce resources,such as tax,loan,legal concession and other preferential policies,however this will weaken the constraints of tax,loans and legal on accounting information,reducing the quality of accounting information.Third,the higher political associations level of the company,the worse the quality of accounting information.The company may master more economic resources if the political association level of senior executives is high,when they face the legal,tax and other preferential policies,the low level political connection enterprises will provide convenience for them,so compared with the low level political connection enterprises,the high level political association companies required less on the quality of accounting information.Fourth,the effect of the political connection to the accounting information quality is more obvious,if the companies are in the area of low marketization degree,because in these places,the enterprise lacks the supervision of laws and regulations,the rent-seeking behavior of these companies can shoot up,so the shelter from the political connection may reduce the enthusiasm of the companies to provide high quality accounting information,but if the companies are in the area of high marketization degree,the market plays a primary role in allocating resources,establishing political association is not the only way for enterprises to acquire resources,so the effect of the political connection to the accounting information quality is more obvious,if the companies are in the area of low marketization degree.According to the empirical results above,this paper puts forward some policy suggestions:First,establishing perfect laws and regulations systems,implementing it more effectively.On one hand,it can strengthen the protection of corporate corruption;on the other hand it can reduce the enterprise rent-seeking corruption.Second,it is necessary to further deepen the reform of economic system.To accelerate the transformation of government functions,handle the relationship between government and market,reduce the degree of government intervention in the market,in this way can make the market mechanism played effectively.Third,establish the enterprise internal management mechanism from political association angle.The corporate executives are rational agent,they also pursue their own interests,the executives may greater corporate social responsibility in order to achieve their own political goals,so in order to make sure the enterprises would survive and development,it is necessary to control the companies with political background.Fourth,improve the functions of the internal and external audit.Senior corporate managers are likely to use political connections to empty out the enterprise to fill their own pocket,they must adjust the accounting information to cover up the behavior.In order to effectively reduce the influence of the political connection to enterprises and also for the better survival and development of enterprises,the managers must pay more attention to the function of audit.