The Research On The Effect Of Ownership Structure On Earnings Quality

The Non-tradable Shares Reform is a landmark of major institutional change since the securities market establish in China and broke the institutional barriers restricting China’s stock market. It liberated the non-tradable shares, so that the "due to the dominance of traditional phenomenon eased, to optimize the equity structure, improve corporate governance. Based on this institutional background of China’s A-share listed companies in the characteristics of ownership structure change and its impact, has important theoretical and practical significance.Accounting information, particularly earnings information is an important basis for decision-making of the listed companies to shareholders as the core stakeholders. In order to meet the requirements of the "decision usefulness", Accounting Earnings information must meet certain quality requirements,"earnings quality" as an important indicator to measure the quality of corporate earnings information has been widespread concern of investors and analysts, but also the theoretical circles one of the hot. Earnings quality is not a simple accounting problem, the company’s earnings quality by many factors and constraints, corporate governance is one of the important factor in the evaluation of earnings quality in conjunction with a specific corporate governance environment. External governance and internal governance of corporate governance, capital markets are more effective market mechanism to play a more completely, shareholders’equity of self-protection mechanism, the stronger corporate governance, more tend to the external governance, ownership structure on company impact will be insignificant. However, the capital market is not completely effective, market mechanisms are often in a non-ideal state, can not play an effective role in the external governance, shareholder participation in internal corporate governance has become an inevitable choice, to such ownership structure plays a key role in corporate governance. Different ownership structure would produce different corporate governance structure, ownership structure on corporate governance structure in the internal control mechanisms play a role in and impact the entire corporate governance and internal control mechanisms. So that the ownership structure of listed companies through corporate governance affect earnings quality, but also constitutes a logical idea of this paper, the ownership structure impact on earnings quality.In this study, combined with the Non-tradable Shares Reform of the institutional background, review the relevant literature on the basis of analysis of the ways and mechanisms of the equity structure of the impact of earnings quality, and the use of empirical evidence of the era after the equity split, both from the theoretical analysis and empirical research study the impact of ownership structure on earnings quality. Specific to the content of the article is organized as follows:The first chapter is the introduction of this paper introduces the background and significance of this article, the article the idea of planning and content arrangements involved in the study, and finally the expected contribution of this study.The second chapter is a literature review to summarize the relevant literature at home and abroad, the system combing numerous findings, the current status of research to understand the ownership structure and earnings quality and shortcomings, and find their own research. Content is divided into two parts of the earnings quality Research and Review of relationship between ownership structure and earnings quality.The third chapter is the theoretical analysis of the Non-tradable Shares Reform of ownership structure on earnings quality. This chapter first introduced the meaning and measurement of indicators of earnings quality, followed by the principle of ownership structure on earnings quality impact analysis, and then combined with the Non-tradable Shares Reform its relations of the company’s ownership structure and earnings quality.The fourth chapter is the empirical research component. Data of the Shanghai and Shenzhen A-share listed company in2009as a sample, focus on several important aspects of the ownership structure:equity nature, the proportion of tradable shares, equity balance degree, to examine its correlation with earnings quality.The fifth chapter is the concluding remarks. By means of theoretical analysis and empirical structure obtained the conclusion of this study, and targeted policy recommendations; pointed out a number of study limitations still exist in this article, and future research directions for research proposition.In this paper the following conclusions:First, the company’s largest shareholder equity ratio and earnings quality was a significant positive correlation. Along with the split share structure reform of state-owned shares to complete, decreased the proportion of the largest shareholders, the shareholding structure of China’s "dominance" phenomenon has eased, the company’s earnings quality has improved to some extent. Second, the equity nature of earnings quality is positively correlated. Higher earnings quality of the state-owned enterprises, state-owned enterprises on corporate governance have its own unique advantages. Third, the proportion of outstanding shares and earnings quality is positively correlated. The split share structure reform, the increase in the proportion of the outstanding shares on the stock market to improve the governance of listed companies and improve earnings quality has an important role in promoting. Fourth, the equity balance degree to some extent, the improvement on earnings quality has a positive effect. Does not exist equity balance of the sample company’s earnings quality is more vulnerable to the impact of the largest shareholder stake; in equity mutual checks and balances in the state, the company earnings quality is less susceptible to manipulation of the largest shareholder.The contribution of this article is:First, the special events of this article select the split share structure reform in China’s capital market as a research background, the relationship between the research firm ownership structure and earnings quality. Use after the share split era of empirical data, examine the share reform in China after the impact of ownership structure on earnings quality, theoretical analysis and empirical findings to reflect the effectiveness of the split share structure reform. Constructed mechanisms and principles of the impact of ownership structure on earnings quality:the company’s earnings quality is largely dependent on the state of corporate governance, ownership structure is the basis of corporate governance, which the company’s ownership structure will affect the company’s governance final role the company’s earnings quality.This article have been limited in:First of all, other aspects of the equity structure and the company management’s also likely to affect the company’s earnings quality, ownership structure within nature also have scholars conducted over investigate, despite the model to consider to the control variables, may also affect the degree of model fit and the regression results significantly. Second, ownership concentration, equity balance, as well as earnings quality measure selection will be some subjectivity, bias may result. It is necessary to choose alternative indicators do robustness test. There is a sample companies is limited to2009data, will inevitably reduce the persuasiveness of the article.In response to this proposition, the author proposes future research directions are as follows:first, the split share structure reform:After a preliminary test, we can prove the effectiveness of China’s split share structure reform is significant to improve corporate governance, and improve earnings quality has an important reference. Continue to implement the split share structure reform is still China’s capital market, forward circulation times of the stock market forward, the need to continue tracking the split share structure reform further role in promoting, in terms of theoretical and empirical summary of China’s split share structure reform the impact and significance. Second, the ownership structure:some scholars of the ownership structure endogenous, this paper did not address this aspect, shows the limitations of this article, but also pointed out a direction for future research.