Research On The Impact Of Control Rights Allocation On Earnings Volatility

Earnings volatility is one of the important factors reflecting the quality of corporate accounting information.The rich information contained in earnings volatility can provide decision support for internal and external stakeholders.The rational allocation of control right at the three levels of shareholders,board of directors and rnanagement can improve corporate governance,reduce financing costs,and improve the investment efficiency and innovation efficiency of enterprises.The decisions of shareholders' meeting,board of directors and management affect earnings through the company's financing,investment and operating behavior,and show the characteristics of earnings fluctuations.The role of enterprise internal control will be affected by external governance environment.In the cultural background of China,the relationship between government and business as an important external governance mechanism has a profound impact on enterprise behavior.Since General Secretary Xi put forward the "Close and Clean" government-business relationship,the relationship between government and business has become the focus of academic and practical circles.Whether the relationship between governament and business can reduce the fluctuation of earnings and improve the quality of earnings?What is the difference in the influence of political and business relations on earnings volatility under different control allocations?This article takes GEM listed companies as the research object,and downloads financial data of the sample companies from the CSMAR Database.Manually collect information of their largest shareholder,board composition and management control of these coropanies from 2013 to 2017.Th.en constructed the variables such as the proportion of excess directors and the management controlled by major shareholders.On the basis of the existing literature,the paper proposes the research hyp othesis,and finally summarizes the conclusion.The research findings:(1)The shareholding ratio of the largest shareholder is positively correlated with earnings volatility.This indicates that earnings volatility is low when equity is disperse,and high when equity concentration is high.(2)The excess proportion of the board of directors of the largest shareholder is negatively correlated with earnings volatility.It indicates that the higher the excess proportion of board seats of the largest shareholder is,the lower the volatility of earnings of the company is.(3)Management control is positively correlated with earnings volatility.This indicates that the earnings volatility of the company is high when the management is controlled by the largest shareholder.(4)The relationship between government and business as a regulating variable can effectively strengthen the correlation between the allocation of control rights and earnings volatilityThe research of this paper shows that the healthy relationship between government and business provides a good external environment,and allocation of control influences corporate behavior.The following suggestions are made based on this research.Firstly,the shareholding ratio of the largest shareholder should be reasonably distributed to improve the supervision and governance mechanism and curb the motivation of major shareholders to hollow out the company.Secondly,reasonably allocate the controlling power of major shareholders,and reduce the shareholding of the largest shareholder.Finally,improve the manager market,increase the independence of the company's executives through market-based selection and employment,and reduce corporate earnings volatility.In the reform of mixed ownership,while improving the corporate political and business environment,it is also necessary to explore the allocation of control rights to shareholders,the board of directors and the management.While improving the innovation ability and competitiveness of the enterprise,it also necessary to creates wealth for stakeholders.