Study On The Relationship Among Managerial Power,Audit Committee And The Quality Of Accounting Information Disclosure

The quality of accounting information disclosure plays a pivotal role in the development of capital markets of China.Unfortunately,disclosure violations are so rampant that both the confidence of investors and the allocative efficiency of capital markets are severely compromised.When it comes to improving the disclosure quality,few will take into account the influence of managerial power,which is unreasonable.With the economic transition proceeding further in China,faultiness in internal governance and external supervision are bound to appear,thus creating loopholes for management to wield more power and manipulate accounting information disclosure.Given that circumstance in China,it is necessary to study how managerial power will affect the quality of accounting information disclosure.Audit committee system is introduced to guarantee higher quality disclosures by monitoring the procedures of financial reports.For the last few decades,the system has been optimized and its contributions in improving the quality of information disclosures have been recognized.However,the governance effectiveness of audit committee system is subject to the internal governance of companies.As an important factor regarding to this field,will an increase in managerial power exerted adverse influence on the audit committee?Therefore,in the perspective of managerial power theory,that how managerial power and the audit committee influence the quality of accounting information will be discussed respectively in this paper,and therewith that how managerial power influences the latter two parities will be further elaborated on.First part of this paper is a review of relevant literature,followed by a selection of companies listed in the A-share main board of SZES in 2009-2013 as studying samples.Five sequencing logistic models are established to test the hypothesis.Here are the results:(1)With the strengthening of managerial power,there will be a decline in the quality of accounting information disclosure of listed companies;(2)the improvement of independence and professionalism of the audit committee will bring higher quality disclosures,but the enhancement in its activeness does not show the same tendency;(3)the strengthening of managerial power will,to some extent,weaken the governance effectiveness of the audit committee.To be specific,growing power in management will cripple the independence and professionalism of the committee which should have improved the disclosure quality,but the committee's activeness should not be compromised.Based on the results,policy suggestions are made along with their limitations and prospects.The results of this study in meaningful both in theory and reality.On one hand,few scholars have placed managerial power,audit committee and the quality of accounting information disclosure into a same framework for scrutiny and this paper shall prove to actively contribute to its enrichment.On the other hand,the economic consequences of managerial power and governance effectiveness of the audit committee are both discussed in this paper and policy suggestions are made correspondingly,which shall set a basic tone for supervision departments and enterprises to improve the quality of accounting information disclosure.They may start with redistributing power in management and perfecting audit committee system.