Managerial Power, Independent Auditing And Soes Expense Classification Shifting

The implementation of the Eight Rules curb the growth potential of SOEs executive's perquisite consumption effectively.But the Ratcheting effect of consumer behavior compel SOEs executive to enjoy secret perquisite consumption through expense classification shifting.As a kind of power rent-seeking behavior,Perquisite consumption is influenced by the SOEs executive's power.Furthermore,the existence of expense classification shifting reduces the quality of accounting information.Based on them,this paper examines the impact of managerial power on expense classification shifting empirically,and verifies independent auditing can curb SOEs expense classification shifting or not.Using China's A-share listed companies in 2010-2014 as research samples,and using the external shock of Eight rules,non-state-owned enterprises as the control group,state-owned enterprises as the experimental group,and using the Difference-in-Difference model,this paper examines the impact of managerial power on expense classification shifting empirically,and verifies independent auditing can curb SOEs expense classification shifting or not.This study finds that,the longer of CEO's term of office,the same as the CEO is chairman of the board and CEO is promotion-from-Within,the ratio of nonproductive expenditure expensing decrease,Furthermore,the state-owned enterprises that is audited by international Big Four or by the auditor who with industry expertise,the ratio of nonproductive expenditure expensing does not decrease.But the state-owned enterprises that is't audited by international Big Four or by the auditor who with industry expertise,the ratio of nonproductive expenditure expensing decrease significantly.Both in the whole sample and in the group that SOEs executive have more power,the results are established.This research show that the greater of SOEs executive's power,the more expense classification shifting,and independent auditing can curb SOEs expense classification shifting.This paper studies influence factors and governance mechanism about expense classification shifting.This paper enriches the literature and deepens the research level about the SOE's expense classification shifting.As the same time,based on the sample data,this paper examines the implementation effect of Eight Rules,and provides theoretical foundation and empirical evidence to promotion effect of Eight Rules.