Party Organization Embedding?tunneling And Earnings Management

State-owned enterprises have played a vital role in the process of China's economic reform,and have contributed tremendous power to the development of the national economy.They have played a role of escort in the development of the national economy and society while determining the economic security and economic development of the country.Since the 18 th CPC National Congress,the Party Central Committee with Comrade Xi Jinping as the core has attached great importance to the reform and development of state-owned enterprises and party building.In October 2016,the Party Central Committee specially held a national state-owned enterprise party construction work conference,at which General Secretary Xi Jinping pointed out an important speech for strengthening the party construction of state-owned enterprises.The amendment to the Party Constitution of the 19 th CPC National Congress provides fundamental guidance for how state-owned enterprise party organizations can work and function,and further clarifies the functions and positioning of state-owned enterprise party organizations.In November 2019,General Secretary Xi Jinping hosted a meeting of the Standing Committee of the Political Bureau of the Central Committee and a meeting of the Political Bureau of the Central Committee to consider and approve the draft "Regulations on the Work of Primary Organizations of the Communist Party of China(Trial)".On December 30,the Party Central Committee issued the Regulations.Clarify the leading role of the party committee of state-owned enterprises in determining the direction,managing the overall situation,and ensuring implementation,and require the party group to discuss and decide on major corporate matters in accordance with regulations.In the company's articles of association,state-owned enterprises should clearly include the party building work requirements,specify the important matters such as the responsibilities and authority of the party organization,organizational settings,operating mechanisms,and basic guarantees,and specify the pre-procedure requirements for major issues of the board of directors and managers.Party organizations study and discuss resolutions.Strengthen and improve the leadership system of "two-way entry and cross-serving",grasp the organizational,institutionalized,and concrete role played by the party organization,effectively integrate the party organization into all aspects of corporate governance,and implement the corporate party organization embedded in the corporate governance Structure.Whether the party committee embedding corporate governance can effectively guarantee the authenticity and reliability of accounting information disclosure and whether it can legitimately and effectively protect the interests of investors from infringement is an important manifestation of the state-owned enterprises 'practice of adhering to the mass line,and its impact is to promote the stable development of the capital market and An important factor in economic system reform.The tunnel effect that measures the controlling shareholder's grabbing the interests of small and medium shareholders is selected as well as the measurement of the true and accrued earningsmanagement of the listed company's accounting information disclosure level to discuss the investor protection path.The embedding of corporate governance by the Party Committee can improve the level of investor protection,and it has outstanding performance in internal governance and information disclosure.The key to embed corporate party committees in state-owned enterprises is whether party organizations can be properly and effectively embedded in corporate governance."Legitimate" requires state-owned enterprise party committees to embed internal governance in accordance with laws and regulations;"Effective" requires state-owned enterprise party committees to implement appropriate and effective decision-making to improve corporate governance and strengthen the ability to maintain and increase the value of state-owned assets,Accelerate the improvement of corporate economic benefits,and play a driving role in coordinating and helping state-owned enterprises to develop in a healthy,stable,and sustainable manner.Based on this,the author takes the state-owned enterprise's embedded corporate governance as a legitimate and effective role and protects the interests of small and medium shareholders as the starting point of research.Embedding the corporate governance of the state-owned enterprise party committee to improve the internal governance effect of the company and the information level of the small and medium shareholders The basis,method and impact of protection were studied.Based on the above analysis,this article selects 857 state-owned listed companies from 2013 to 2018 as research samples for empirical research to obtain empirical evidence.Analysis results:The embedding of the party committee into corporate governance significantly inhibits the tunnel behavior of large shareholders capturing the interests of small and medium shareholders.Specifically,the three embedded behaviors of the party committee embedded in the board of directors,the party committee embedded in the board of supervisors,and the party committee secretary concurrently chair the bankruptcy behavior It has the best restraint effect;the embedding of the party committee in the board of directors,the party committee in the management,and the party committee secretary concurrently as the chairman significantly inhibits accrual earnings management and true earnings management;the party committee in the board,the party committee in the management and the party committee The board of supervisors has a restraining effect on the mutually reinforcing relationship between hollowing out and earnings management.According to the conclusions of the empirical results in this paper,the countermeasures and suggestions for improving the governance of state-owned enterprises are put forward:First,to effectively promote the organic integration of the construction of party committees and corporate governance structures;second,to institutionalize and guarantee the party organizations' pre-participation decisions on major corporate decisions;Constructing the positive feedback and positive interaction of the party committee embedded in corporate governance and the protection mechanism for external small and medium shareholders.The main research contributions of this paper are as follows:First,from the perspective of internal governance,it analyzes how the party committee's embedded corporate governancerestrains the major shareholders 'hollowing out behaviors,and prevents the major shareholders from capturing the interests of small and medium shareholders.Secondly,from the aspect of external information disclosure,using the two indicators of corresponding earnings management and real earnings management,the analysis of the effect of the embedded corporate governance of the party committee on the improvement of the quality of accounting information.Finally,it further analyzes the interaction between the party committee's embedded corporate governance on the tunnel effect and earnings management.The research in this article expands and complements the research perspective of the party committee's embedded corporate governance to restrain internal shareholders' tunnel behavior and improve the quality of external information disclosure.