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Study On The Inhibition Of Internal Supervision To Earnings Management Followed By New Executives

Posted on:2016-05-31Degree:MasterType:Thesis
Country:ChinaCandidate:H WangFull Text:PDF
GTID:2349330473965959Subject:Accounting
Abstract/Summary:PDF Full Text Request
Based on the high rate of top executives' turnover and the bad consequences caused by earnings management, the behaviors that successors made based on the self-serving motives have been pushed to the cusp, so how t o suppress such opportunistic behavior s has attracted growing concern s of stakeholders. Generally speaking, a good internal supervision is the k ey to improve corporate governance, but can it effectively suppress the earnings management and ensure accounting information quality, so as to protect the interests of small investors?Under the guidance of the Information Asymmetry T heory, Principal-agent Theory, Incentive T heory, and Equity Balance T heory, we first di scuss the relation of executives' turnover and earnings management, and then mainly analyze the suppression of int ernal supervision on earnings management. We examine our hypothesis with multiple regression analysis and based on the data from 2010 to 2013 Chinese listed companies.The results indicat e that executives' turnover leads to the decrease of discretionary accruals, which impairs accounting information quality and makes a bad influence on the decision-making of small investors, and of course, to a certain extent, this violates the interests of small investors. T he higher the equity balance is, the bigger the board size is, the greater the equity incentive s are and the mor e professionalism the audit committee i s, the more the decrease can be suppressed. The more diligent the supervisory board is, the more the decrease ca n be suppressed, while the role of other variables can't be verified. All of these show that the scienti fic and reasonable int er nal supervision can alleviate managers' misconducts effectively, so it is an eternal theme of corporate governance to strengthen the internal supervision mechanism. In order to further enhance corporate governance, measures should be taken to improve the internal supervision from the following four sides, including increasing the attention to the introduction and management of professio nals, strengthening the con straints and incentives of regulators, optimizing the internal ownership structure and improving the information disclosure system of internal supervision.
Keywords/Search Tags:Corporate Governance, Internal Supervision, Executives Turnover, Earnings Management
PDF Full Text Request
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