Ultimate Controlling Shareholders And The Informativeness Of Accounting Earnings

Based on the prior literature and theory, we describe and analyze the status quo of the ultimate controlling shareholders from the angle of ultimate owner. We found that about 70% listed company is still controlled by state owners directly or indirectly, and the number of listed company in 2005 is larger than in 2006.The ultimate controlling shareholders control around 40% votes on average, and the level of control decreases gradually。With the reduction of control level, the ultimate controlling shareholders strengthen the control for the Board and the senior executives. The separation degree of the cash flowing right and the voting right is not serious, the average says approximately is 0.82. The ultimate controlling shareholders hold the high proportion in the board of directors members. Then we select samples of China's listed companies from 2005 to 2006. From the real control-degree on the listed companies and the character of the ultimate controlling shareholders, we analyze the influence of the ultimate controlling shareholders on the informativeness of accounting earnings and draw such conclusions as follows: the proportion of control right of controlling shareholders and the informativeness of accounting earnings have the U relationship. The control-degree on the Board and chairman of listed company has a significantly negative relation with the informativeness of accounting earnings. A divergence between cash flow right and control right and the control-degree on CEO impair the informativeness of accounting earnings insignificantly. But the divergence between cash flow right and control right in the family-owned listed companies has the significantly negative influence on the informativeness of accounting earnings; the character of the ultimate controlling shareholders has no influence on the informativeness of accounting earnings.Finally we give some policy based the conclusion of this paper, which will be helpful to perfect the security market and improve the quality of earnings.