The Research On Financial Restatement And Management Turnover Of Chinese Listed Companies

Financial reporting is the most important way for the companies to publicly disclose the information, which is also the main channel for the investors and other stakeholders to approach the information. Financial restatements undermine the authenticity and transparency of information disclosure; Due to it, investors doubt not only about the integrity of accounting, but also the ability and integrity of managements. At the same time stock price's anomalies volatility in the stock market as well as a great reputation loss are caused.This paper focuses on the issue of financial restatements by empirical tests. The correlation of restatement and management turnover are verified. And then the ownership mature, the proportion of tradable shares, mandatory restatement, restatement type and other factors that impact on the management turnover are examined.The results show that the internal governance mechanisms of China's listed companies can provide effective countermeasures when financial restatements occur, by changing the executives in time to help relieve the loss of the company. In addition, the empirical results also show that under the condition that the companies have released restatement, the turnover of the state-owned company's executive is significantly lower than that of non-state-owned executive; and the internal governance mechanism of the state-owned enterprises lack of effectiveness. The supervision from SEC or other government departments can force some companies to restate their financial report because of poor quality, which could promote the development of sound corporate governance mechanism.