An Empirical Study Of Influential Factors On Financial Restatements Of Listed Companies In China

As the capital market in china is undergoing a rapid development and becoming a mature one, the requirement of information quality of listed company reaches to a much higher standard. For the past few years, the number of companies who announced financial restatements ascended sharply. The problem of qualities for information of listed companies implied from this phenomenon has caused great concern both in the field of practice and academia. To study the impact factors of financial restatement is to find the reasons that may affect financial restatement directly or indirectly. This matter is the base of other related research in this field and the primary problems should be solved on account of complete the system of financial restatement which makes it the concern of investors and supervision department.In this essay the author combed and summarized the exiting results of financial restatement at home and abroad, and then analyzes the features and issue. In this way, the author finds out the point of penetration. This paper is based on analyzing the principle of why financial restatement happens. By using information asymmetry theory, principal-agent theory, theory of internal control and earnings management theory, theory of independent audit quality and corporate governance theory, the author induces four dimensions of impact factors namely the performance level, organization structure, equity structure and the external supervision level. After analyzing the relationship between the factors and financial restatement, the author comes up with ten research hypothesis and chooses ten variables representing each factor. Then the author collects samples and data; after that, the author uses descriptive statistics analysis, Pearson correlation test and logistic regression model to testify the degree of influences between dependent and independent variables, and to find the factors that influence the possibility of financial restatements. At last this paper concludes that performance level is the fundamental factor. And the company’s profitability, ownership concentration, audit committee and the chairman served as the general manager. To improve the profitability contributes to the control the possibility of financial restatement at the beginning. Proper ownership concentration does good to decrease financial restatement and set up audit committee and separate the chairman and general manager is in favor of the effectiveness of internal control so as to control the happening of financial restatement.