Actual Controller Absence And Value-relevance Of Earnings

In recent years,with the development of the stock market and the much more active equity transactions of listed companies,the equity structure of listed companies in China has been deeply decentralized and a group of companies without actual controllers have appeared.Different from the dispersed ownership structure of developed areas like Europe and America,the average shareholding ratio of the largest shareholders of these companies is only about 20%.The dominant shareholding structure is a common phenomenon in Chinese companies.Some scholars believe that such autocratic,centralized corporate governance arrangements will do harm to the companies'operating performance and even hinder the development of Chinese capital market.Then,as products of highly decentralized equity structure,whether the companies without actual controllers can improve the disadvantages brought by the concentration of equity,reduce the companies',earnings management level,and increase the value-relevance of earnings have become the key points of this article.At the end of 2017,the number of listed companies without actual controllers in China has reached 185,which provides an opportunity for this empirical research.From the perspective of corporate governance structure and principal-agent theory,this paper takes the listed companies without actual controllers as the main research objects.By using multiple linear regression models for empirical research,the listed companies are divided into two sub-samples to explore whether the actual controllers'absence will affect the value-relevance of earnings.Then,this article is going to further discuss how the parameters like managerial power will influence this correlation.The main conclusions of this paper are as follows:first,there is lower correlation between the value-relevance of earnings in companies without actual controllers;second,the excessive power of management,the unity of chairman and general manager will deteriorate the correlation between the actual cont:rollers',absence and value-relevance of earnings;third,increasing management shareholding will help relief the negative impact of the absence of actual controllers.