A Study On The Impact Of The Background Of Family Business Executives, Auditor Choice To Earning Quality

In recent years, with the rapid development of the Chinese stock market and privateenterprise, more and more family-controlled listed companies appeared. As an importantclass of economic organizations, Family business has played a more and more importantrole in the Social and economic life. Own to its particularity and pivotal position in thecapital markets, and the importance of information disclosure in capital markets, theearnings quality and information disclosure of the family business have become aresearch focus of scholars. However, the current research is mainly focused on corporateperformance and enterprise value, and there is only little research on earning quality.Only a few scholars conducted a preliminary study of the family business earnings qualityfrom the point of view of the degree of separation of control rights and cash flow rights,the "hollowing out" of the controlling family behavior. As there are two types ofmanagers in the family business，namely professional managers and family managers, andmanagement of corporate has a direct impact on earnings quality, it is necessary for us tostudy the relationship between executives background and earning quality of the familylisted company. In addition, independent external audits, as a role in corporategovernance, play an important role in the protection of accounting information. As for theparticularity of the family listed companies in shareholding, there are many problems tobe further studied about the auditor choice. Therefore, it is very necessary for to do acomprehensive survey of the executives’ background, auditor choice and earnings qualityof the family listed company.Firstly, this paper gives the scientific definition of the family business, earningsquality and audit quality, describes the theoretical basis of this study, including theprincipal-agent theory, audit demand theory, the theory of competitive advantage offamily business characteristics and the quality of accounting information system theory,and summaries the research status at home and abroad. Secondly, this paper deeplyanalyzes the relationship between background of the family business executives, theauditor choice and earnings quality from the theoretical level, and proposes threeassumptions. Thirdly, this paper use2009-2011and ultimately controlled listed familyfirms did not change as the sample, using the SPSS statistical analysis software empiricalstudy of the background of the family business executives, auditors of the relationshipbetween the selection and the earning quality. The study results show that: the family managers prefer to hire high-quality externalauditors to improve the company’s earning quality.