| The financial restatement is disclosed in previous annual financial report existing misleading information or errors, re-elaborated afterwards a correction to supplement the description. Listed companies restated the previous annual reporting financial reports to correct errors and omissions in the previous annual financial report. As we all know, the financial reporting let external stakeholders and investors understand the listed company operating results and financial position of the main channel that is an important means and basis to make investment decisions. Thus ensuring a true and fair view of the financial report has great significance. Since the21st century, WorldCom, Enron and other large multi-national companies in the storm of financial restatements outgoing financial fraud scandals, for a time makes the financial restatement extensive attention by the relevant parties. Financial restatement issues have became more serious, not only a threat to investor confidence, but also damaging to the society and economy. United States financial restatements rose from90in1997to1577in2006, only10years increased by almost18times. After the passage of the Sarbanes-Oxley Act of2002, request for additional internal control of listed companies’financial reporting system, thereby increasing the reliability and accuracy of financial reporting disclosure of this bill for the company to quickly discover and correct financial errors provides a series method, and then after2007, the number of U.S. financial restatement show a downward trend to2010, the number of financial restatements companies reached735. Listed companies in China and abroad echoed occurrence of the phenomenon of the financial restatement, the number of increasingly see more. Cut-off2010, the annual report, semi-annual and quarterly reports of listed companies in China is only to restate the number,163, of which there are14numbers of corrections of more than2times. Therefore, the phenomenon of financial restatements has been a growing number of government departments, academics and regulatory attention and extensive research, in order to prevent and mitigate the negative impact of financial restatements to the company.On the basis of theoretical analysis between2006and2010, released to the temporary notice in the correction of accounting errors and officially announce the Shanghai and Shenzhen A-share listed companies for the original study sample, at the same time find out the major accounting errors of listed companies within six months, a sample of executives change event (change date) on the announcement date to executives. Using the event study methodology and descriptive statistics study financial the restated market reaction of the listed companies, after the change of the executives in the financial restatement market reaction, as well as use the executives change as a punitive measure and the degree of influence of investor confidence were studied in an attempt to answer the following aspects:On the theoretical side:①What area of the China’s listed companies when using the organizational legitimacy?②How the reputation punishment mechanism affects the internal corporate governance?③what kind of relationship about financial restatement, executives change, organizational legitimacy and reputation of the punishment mechanism?Positive Analysis aspects:①How the listed company overall characteristics of the financial restatement phenomenon? The occurrence of financial restatements market reaction and how the market be reacted?②If the listed companies in the event of a financial restatement in the short term (This article defines the executives for six months) change managers to restore the reputation of the company to make up the organization legitimacy?③From the listed external investor’s point of view, if change the executives in the financial restatement will serve to restore investor confidence?Though evidence, this study confirmed:on the basis of summing up the research of scholars at home and abroad, to the event study method and descriptive statistical analysis as the main method, the market reaction caused by the listed companies’ financial restatement announcement of this event, as well as financial restatement, the company executives to change within six months whether this move is possible and if it can make up for the legitimacy of the organization to restore the reputation of the company and so do an empirical test, and analysis from the perspective of investors who study executives Change the impact of this initiative on their confidence. The main conclusions of the thesis include the following aspects:(1) Significant negative impact of sample company’s share price before and after the financial restatement announcement, and the AAR (average excess rate of return) in the financial restatement event reached a minimum value on the announcement date; the CAR (cumulative average excess return) in the financial restatement announcement before showing a downward trend, indicating that the stock market there is a certain degree of information disclosure; an upturn of CAR in the first three days after the financial restatement announcement, indicating that the negative impact of the financial restatement events on the market only sustained in a short time.(2)Executives to change the sample data in the six months after the occurrence of financial restatements executive change announcement has a significant positive response to the AAR in the senior management change announcement day began an upward trend in the second day reached the maximum value of the window period; CAR in the executive change announcement before and after showing a slow rise in recovery trend, but executives including21executives change announcement days window period CAR values are negative, indicating Change this initiative to make up for the listed company financial restatement occurs the exact organization legitimacy, but only a certain extent to restore the reputation of the company’s executives to change this measure does not allow the company organizational legitimacy and reputation have not occurred the level before the financial restatement.(3) The stock price reflects market expectations of changes in average, while the trading volume reflects the overall effect of this change. Change impact on investor confidence in the financial restatement from the perspective of investors, the executives found that investors in listed companies the executives to change the publication date excess trading volume does not change significantly. It indicates that investors remain to the "wait and see" attitude, but in the three days after the announcement date, investors will have a significant trading volume changes, T-test results are significant. Executives change measures play a positive impact on investor confidence after the financial restatement. |
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