Research On The Influence Of External Governance On Financial Statement Comparability

With IFRS globally implemented and firm-level comparability measurement being put forward,research of the influence factors of comparable has gradually become a new hotspot,however,most studies have focused mainly on how the enforcement of IFRS influence comparability,studies from the micro perspective is much less.Considering the important role of financial statement comparab ility to the decisions of shareholders and external stakeholders of the firms,their needs of the comparable information and the pressure produced by external governance mechanism may influence the disclosure motivation and accounting behavior of management,thus to influence th e fi n ancial statement comparability of firms.Therefore,it is of great theoretical and practical significance to study the factors influencing financial statement comparability from the perspective of external governance mechanism.First of all,in th e external governance mechanism,compared with the weaker control m ark et and the manager market,China's product market competition plays a strong governance role through the survival of the fittest mechanism.Competition in the product market enhances the usefulness of comparable financial information and improves the ability of shareh olders'supervision,and listed firms could reduce the financial cost by improving the comparability,so as to avoid the happening of the cause of bankruptcy due to lack of money.The second,short selling mechanism being introduced by margin trading may promote the demand of comparable information of the capital market and have effective supervision on the accounting behavior of the management through the threat of short selling.The last,negative media coverage increases the focus of investors and the public on listed companies through the improvement of the information environment of listed companies and investors cognitive effect,and in order to save the company reputation,management of listed companies has the motivation to improve financial statement comparability to transfer positive information to the mark et that conditions of firms h as improved.Therefore,to examine the influence on financial statement comparability from the perspective of product market competition,margin financing and negative media coverage.Th e main research results of this paper are as follows:(1)the measurement method of accounting system comparability has cer tain applicab ility in China's capital market.The research finds that financial statements comparability is significantly negative with the average share price volatility within 30 days after the annual report is published,which proves that comparab le information helps to increase th e capital m arket information flow.Meanwhile,the mean line chart and the multiple regression results show that the two criteria changes in 2007 and 2014 improve the financial statement comparability of listed firms.(2)The research finds th at the more competitive the product market is,the more comparable the financial reports of listed com panies are.Further examinations find that agency cost plays a partial mediation effect on the relationship between Product market competition and financial statement comparability and th at the management ab ility,the degree of financing constraints and the nature of firm ownership play a regulatory role in the relationship between product market competition and comparability.The stronger the ability of managers,the less relative between product market competition and comparability;The smaller the company's financing constraints,the weaker relationship between the two;Compared with private enterprises,the positive relationship between product market competition and financial reporting comparability is weaker in state-owned enterprises.To some extent,these tests prove that th e financing demand under th e threat of bankruptcy increases the motivation of managers to improve comparability.(3)The introduction of margin trading has significantly improved the financial statement comparability of the listed firms.Further tests find that agency costs have a partial mediation effect on their relation,thus some way to justifying the path of"short selling mechanism,agency cost,financial statements comparable".It is also found that the degree of information asymmetry and management shareholding have a moderating effect on the relationship between the two.Compared with the low degree of information asymmetry,when the information asymmetry degree of the listed company is higher,margin financing has a positive effe ct on the financial report comparability.Compared with the sample that management does not have shares,when the management holds shares,the positive relationship between them is more significantly.To a certain extent,these tests prove that margin financing improves the efficiency of market pricing and enhances the motivation of management to improve the comparability and improve the information environment of the company.(4)Lag issue of negative media coverage and financial statements comparability has a significant positive correlation,and there is also a path of"negative media coverage,agency cost,financial reports comparability"between them,agency costs have a mediation effect in the relationship.At the same time,it is found that the level of management defense and the degree of information asymmetry have moderating effects on the relationship between the two.Compared with the team which h as a high management defense level,when the management defense level of the manager is low,the negative media coverage has a positive relationship with financial statement comparability.Compared with the sample with lower information asymmetry,when the information asymmetry degree of the listed company is high,the positive relationship between negative media coverage and financial reporting is more significant.To a certain extent,these tests prove that the reputational damage caused by negative coverage has prompted management to improve financial reporting comparability and to mitigate the degree of corporate information asymmetry to rebuild the company's reputation.