Earnings management has always been a hot topic in academia.More and morecompanies choose to use financial restatement to adjust or correct the amount of major accounting subjects.Generally,these accounting data are related to the measurement of earnings management level in order to achieve the purpose of manipulating profits and changing the true surpluses of each accounting period.The emergence of independent director interlocks provides a means of communication for the imitation of earnings management between the companies,forming an infectious effect.Regulatory penalties and corporate market competition status also play a role in the transmission of earnings management behavior.Principal-agent theory and reputation theory explain the motivations of earnings management.The trustee will induce earnings management for self-serving purposes,and for earnings protection purposes will inhibit earnings management.The theory of social relation network and the theory of rational crime explain the economic consequences of earnings management.Accounting behavior will form the contagion effect through the social networks,and the imitation cost will impact the spread of the effect.Based on the above theoretical research and literature combing,this paper chooses the listed companies in Shenzhen and Shanghai,which are financial restatements in 2008-2015,as the research object of this paper.Also takes the chain companies after a financial restatement for three consecutive years as sample companies,total 2069 sample size.Our paper attempts to explore whether the earnings management behavior of the financial restatement company will have an infectious effect on the interlock company,and also trying to find which factors affect its infection.The study found that if a company has independent director interlocks with financial restatement company,the infection effect is not obvious in the first year.In the last two years,the infection effect is obvious and is weakening with the extension of the linkage period.The penalties imposed by securities regulators on financial restatement companies will have a deterrent effect on the companies that are linked to them,thereby weakening the infection effects of their earnings management.Financial restatement companies with higher market competition are more likely to increase the likelihood of imitation,thereby enhancing the infection effects of their earnings management.The main contributions of this study are:Firstly,we explore the economic consequences of earnings management in the context of financial restatement;Secondly,we expand the application of social relations network theory and rational crime theory in earnings management behavior;Thirdly,the introduction of two kinds of external regulatory variables,such as the punishment of regulatory and the market competitive position of enterprise,provide a new perspective on corporate governance research in the independent director interlocks.The analysis of this paper extends the research ideas on the economic consequences of earnings management,which provides the theoretical basis and reference significance for the supervisory departments and the public media to supervise the supervisory functions of listed companies. |