| The Code of Corporate Governance of Listed Companies as promulgated by the Government in 2018 provides that senior managers and controlling shareholders in listed companies shall be independent from each other;senior managers of listed companies may not hold administrative posts other than director and supervisor in the company of controlling shareholders,further defining the sources of power in top management teams.This manifests China's growing awareness of the crucial role of power in top management teams in the development of enterprises.Due to the separation of ownership from the right of management in modern corporate governance structures,power in top management teams is exerting influence on financial decision-making,thereby affecting the earnings persistence of enterprises.The power in top management teams is acquired from several sources,namely structural power,ownership power,expert power and prestige power.These power sources may affect the earnings persistence of enterprises in different degrees.In a corporate,the top management teams are granted power by different sources of power in top management teams.They may not be able to give full play to their competence with conspicuously insufficient power,however with too much power,they as rational-economic men may adopt opportunistic or power rent-seeking decisions,thus affecting the long-term interests of enterprises and reducing earnings persistence.Since earnings persistence is one of the most important characteristics of earnings quality,a lower earnings persistence will ultimately reduce the earnings quality of enterprises.This paper,from the theoretical and empirical point of view,studies the relationship between the power in top management teams and earnings persistence and influence from different sources of power in top management teams on earnings persistence in reality,thereby providing enterprises with a solution to improve their earnings quality.It carries out an in-depth study based on relevant theories such as the principal-agent theory,information asymmetry theory and theory of power in top management teams and puts forward research hypotheses with respect to the implication of power in top management teams and sources thereof on earnings persistence.Secondly,it takes non-insurance financial companies that went public on A-share market at Shenzhen and Shanghai Stock Exchange from 2013 to 2017 as research samples and eventually obtains 9,570 research samples after data screening.Descriptive statistical analysis,correlation analysis and multiple regression analysis are conducted using the table processing software EXCEL and statistical analysis software STATA 15.0 to determine the influence of power in top management teams and sources thereof on earnings persistence,respectively;puts forward some suggestions in response to the research results.The results show that there is a significant positive correlation between power in top management teams and earnings persistence;among the sources of power in top management teams,structural power has a negative impact on earnings persistence;the phenomenon of holding two posts concurrently have a negative impact on earnings persistence: the larger the board of directors,the better the earnings persistence;the ownership power,expert power and prestige power play a positive role in maintaining earnings persistence.Therefore,this paper puts forward the suggestion to improve earnings quality.(1)Enterprises need to separate two posts and expand the board of directors from the viewpoint of structural power.(2)Enterprises need to lift the managerial ownership ratio from the perspective of ownership power.(3)Enterprises need to improve the quality of management teams and perfect the manager information monitoring mechanism from the perspective of expert power.(4)Enterprises need to pay special attention to top management teams with long tenure and reduce changes to members thereof from the perspective of prestige power. |
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