Study On Boyuan's Financial Restatements-based On The Controlling Shareholders' Tunneling Behavior

Although Chinese capital market has developed rapidly over the past three decades,our market is still faced with lots of challenges.More problems arise from the market,such as the intensification of asymmetric information as well as the increasing of financial frauds,and the phenomenon of financial restatements is one of the specific problems.Financial restatements could be viewed as remedial action afterwards,which suggests the falsity of accounting information and also indicates the flaw in administrative mechanism of company.Owing to individual or a minority group benefit,controlling shareholders would like to tunnel company capital,which has been increasingly common in recent years.In order to cover up the unsatisfactory performance of company,controlling shareholders often adopt financial fraud by all kinds of means,and then,they remedy the information afterwards through financial restatements.However,such a remedial measures system,information disclosed incompletely and illegally,has resulted in adverse outcomes to minority shareholders,company as well as overall capital market.Therefore,it is valuable to analyze the cause and effect of financial restatements from the perspective of controlling shareholders' tunneling behavior,which could strengthen the pertinence and validity of accounting standard for business enterprise,improve the quality of information disclosure,optimize corporate governance mechanism and protect investors' legal benefit.Through the research on financial restatements and shareholders' tunneling of domestic and foreign literature,combined with the case analysis method and the comparative analysis method,this thesis chooses specifically Boyuan as case study of financial restatements and discusses the forming conditions of controlling shareholders' tunneling as well as the main ways of financial fraud after tunneling from the perspective of shareholders' tunneling behavior.It turns out that there are some causal connections between Boyuan controlling shareholders' tunneling behavior and financial restatements,and the connections are as follows.Under the decentralized shareholding structure,the invalid internal control as well as the remiss of external auditors,for the sake of selfinterest motivation,Boyuan controlling shareholders could tunnel company capital to individual successfully and then disclose false financial information repeatedly.However,because of the supervision pressure,Boyuan has to adopt financial restatements to remedy the information of the former financial reports.Therefore,Boyuan controlling shareholders' tunneling behavior contributed to the emergence of the financial restatement indirectly and the financial restatement is the inevitable outcome of shareholders' tunneling behavior.Hereto,this thesis focuses on the advices about the decrease in financial restatements based on the preceding analysis.