Research On Financial Reports Restatement Of Listed Companies And It's Economic Consequences

With the maturing of Chinese capital market, many potential problems will be inevitable but then exposed, for example, financial reports of listed companies restated in now seems to become a more significant problem. We failed to predict the speed of its development, and the majority of the restatements are the listed companies publish financial reports based on voluntary acts, its content related more important and sensitive financial problems. Moreover, one listed company may declare restatements many times in a year to, ST companies and *ST companies occupy a large proportion of the restated companies. Foreign scholars and research institutions have long carried out researching in financial reports restatement of the listed companies, and their research are more in-depth and systematic, and regulatory agencies continue to develop appropriate policies and regulations to effectively protect investors which are vulnerable groups. Research carried out by domestic relative late, and research has focused on overseas research and theoretical analysis, some empirical studies are biased in favor of financial reports of listed companies, to restate the content and restate the corporate identity, very few restatement of financial reports related to the economic consequences, this paper is focused on this situation, in terms of the restatement economic consequences we want to know how it will impact the stock market and investors, to explore which information is included in restatements of the companies. Then we could propose measures related to curb the rapid growth of listed companies financial reports restatement behavior. Specific framework as follows:The first chapter is an introduction, starting from this research background, firstly,we have a basic understanding on the behavior of restated financial statements of listed companies. Then, there was an understanding of the development of financial reports statement. Finally, we defined a clear purpose and value of this research.The second chapter is literature review, through the reading of literature, to grasp the overall context of existing research. Research by Chinese scholars and foreign scholars were major categories, through combing we discovered that study abroad were more mature and rich. They have been formed a certain system theory, and their research covered many of the research methods and perspective. The research included statistical research on the financial reports statement of listed companies, the reasons for the financial reports restatement of listed companies, the impact factors of restatement, the economic consequences of restatement and the restated company characteristics of the normative and empirical conducted research. The national study is on relatively thin at some, mainly with the status of comparative study on foreign regulations, the theoretical analysis of foreign study, and empirical data isn't rich. It focus on the restatement motivation research, influencing factors and current situation statistical analysis.The third chapter is current situation about financial reports restatement of listed companies at home and abroad, at first, there is a comparison of similarities and differences about institution of financial restatement between our country and foreign, and then through statistics this chapter described the status of restated financial reports of listed companies at home and abroad, on the whole there is a still upward trend on the number of restated reports of domestic and foreign listed companies, and the problem, the restated financial reports of listed companies is more serious to be ignored.The fourth chapter is the theoretical analysis and hypothesis, through analysis put forward the following three hypotheses: H1: Before and after the financial reports restatement was released, the financial restatement impact on the market as a significant negative effect; H2: There is a significant effect on trading volume after listed companies restated the financial reports; H3: Financial reports restatement will have a negative impact effect on the confidence of investors.The fifth chapter is the empirical study design, selected 2006-2008 posted A-share listed companies which restated financial reports as the study sample, first with a short window event study method, by calculating the cumulative abnormal returns to test hypotheses 1, from The purpose of this paper, starting a comparative analysis of various methods of calculating normal earnings, the market adjusted model is chosen to calculate the normal returns. Then through the VOL and HSL methods measure the impact of turnover caused by the restated extraordinary trading volume, test hypothesis 2. Finally, by establishing the earnings response coefficients regression equation to investigate hypothesis 3 is substantiated or not, the specific method is considerations restated listed companies through before and after the unexpected earnings on share price of the explanatory power of the significant changes to test hypotheses 3.The sixth chapter is the empirical results and analysis, the results show that the restated company's stock price decline after showing announcement of the reports restatement, the cumulative abnormal returns was negative, but in a very short period of time the trend will slow down until there turn, cumulative abnormal returns the day before the restatement, restatement of the report was issued and after the first day of trading are significant. Abnormal trading volume on the analysis of financial reports of listed companies found repeated on the volume produced significant effects, and in the event date and its first trading day after the extraordinary volume level at 1% significant date in the event before and after two days of extraordinary volume is also a significant 5% level. Earnings response coefficient on the regression results significantly, but the earnings response coefficient of the two opposite sign.The last part proposed conclusions of this study. Firstly. Listed companies restated financial statements impact on the stock market is significant, and the restatement of financial statements to bring the impact of the stock market is negative. Volume change in response to restated publication and can not exclude the broader market environment factors, but the event window to repeat the company's extraordinary trading volume trend graph can be determined, the listed companies there are internal people use the available insider trading ahead of self-information act. Chinese listed companies restated financial reports conduct a negative impact on the listed companies credibility, that investors place a restate of the listed companies to disclose information in confidence damning with faint praise. Then the above conclusions expressed in this article for suggestions: internal strengthening internal control, improve the quality of accounting personnel, emphasis on corporate social responsibility; the external control system based on the deepening of reform, raising awareness of responsibility; from the investor's own interests, will require investment to learn common sense, rational decision-making and well-known laws. Finally, we propose gaps and directions of this research for future research prospects.