The Power Distribution, Power Control And Earnings Quality Of The Largest Shareholder Of Family-related Associations

In recent years,with the development of market economy,private enterprises occupy an increasingly important position in China’s capital market,and family businesses,as a special type of private economy,are increasingly attracting more researchers..Family business as a complex organization,the existence of associated major shareholders is a typical feature of family business,and the associated major shareholders often carry out profit encroachment.Then,from what level should the company construct the system,so that the reduction of such agency problems is of great significance to the long-term development of the family business.The literature combining law and finance points out that the key to improving corporate governance and promoting financial development lies in the establishment and improvement of the legal system.The difference in the setting of the articles of association of the companies in the same region in the same region has also become the most common reason for the distortion of information on investor rights protection at the company level.The company charter is a “constitution” at the company level.It can be used not only as a legal contract to balance the agency relationship between investors and management,but also to organize management or controlling shareholders by adding or modifying some protective clauses in the charter.The exploitation has in turn increased the level of power protection for small and medium investors at the national level.Based on the evidence of China’s evidence from the company’s articles of association and the company-level laws and regulations to examine the differences in investor power protection in different companies is rare.Based on the data of China’s A-share listed companies in 2012-2016,this paper empirically analyzes the relationship between the power distribution of family-related major shareholders and the quality of earnings.The study found that the greater the excess power of the listed company’s largest shareholder,the lower the company’s earnings quality.The company’s articles of association,as the rule of law content,have little attention in corporate governance.Foreign studies have shown that the establishment of the company’s charter autonomy clause can effectively enhance corporate value.Therefore,this paper further studies the regulation effect of the board of directors on the foreign investment,acquisition and sale of assets,asset mortgage,external guarantee,entrusted wealth management,and related transaction authority setting in the company’s articles of association.The research results show that the company’s articles of association have significant interaction effects on the governance mechanism of the board of directors’ authority and the financial manipulation of the largest shareholder in the family listing.The company’s articles of association can significantly improve the associated major shareholders in the case of a sound board of directors.Financial manipulation behavior.At the same time,further research proves that this effect is even more pronounced when the associated major shareholder is not holding.Based on the above research conclusions,this paper argues that family listed companies need to balance the power distribution of the family’s largest shareholder relationship and non-relationship shareholders in the governance structure,preventing the family’s largest shareholder from using the relationship shareholders to manage earnings and encroaching on minority shareholders.In addition,through the establishment of reward and punishment mechanisms and more stringent decision-making and review mechanisms to increase the cost of the interests of the largest shareholder associated with the invasion,thereby improving the governance level of family listed companies.This paper provides a new perspective for the study of the earnings quality of family businesses,which is to reduce the interest encroachment of family-related major shareholders through the autonomy of the company’s internal regulations,and improve the quality of financial information disclosure of family businesses.This is of great significance for promoting the effective allocation and stable development of capital market resources.