Corporate governance structure and earnings quality empirical research
|School||Kunming University of Science and Technology|
|Keywords||Corporate governance earnings quality DD model|
How to improve the image of a listed company has become important in recent years. Then the corporate governance and earnings quality is the main object of the study. As the specific institutional context and cultural environment, the corporate governance structure of Chinese listed companies has its own characteristics. Highly concentration of equity, large Shareholders Controlling and other factors, to a large context, affect the earnings quality of listed companies in China. Then, how these factors effect the earnings quality? As an innovative system, whether the independent director system improves the earnings quality? As a part of the corporate governance, if management incentives attains the purpose of improving the earnings quality? With these questions, this paper uses empirical data of Chinese Listed Companies to analyze the relationship between the corporate governance and earnings quality.First, the paper main attentioned on the literature of earnings quality and corporate governance. One more, we made a comparative and analysis of the main points. Then, in the study of existing research, we made a conceptual definition and model selection of corporate governance and earnings quality.Secondly, the paper made a comparative of earnings quality under the different corporate governance model, and made more analysis of the characteristics of Chinese corporate governance structure. On this basis, the paper combined features of Chinese corporate governance structure, selected seven corporate governance indicators from the ownership structure, board governance and management, then made a normative analysis of the relationship between Chinese corporate governance and earnings quality.Thirdly, According to the normative analysis of the preceding, This paper made a Empirical Analysis by sampling 3592 of the listed company of China from 2003 to 2006. The results show that:the size of Board, proportion of independent directors have a positive correlation with the earnings quality; The largest shareholder equity ratio, the annual number of board meetings, the top three executives total remuneration and the proportion of senior management ownership were negatively correlated with earnings quality; The balance power of other big shareholders has not significant relationship with earnings quality. At the same time, through the empirical results, we can also find a number of problems of Chinaese corporate governance structure. First of all, the dominance of major shareholders is the main corporate governance factors to effect earnings quality; followed by, the mechanism of management incentives of Chinese listed companies is invalid; Then, the audit Committee Set up only nominally.Lastly, based on the empirical results, this paper proposed superficial recommendations of perfecting corporate governance structure and improving earnings quality.