The Empirical Research Of The Relationship Between Ultimate Controlling Shareholder And The Quality Of Accounting Information

Recent years, in China’s listed companies, accounting information fraud occurredfrequently, which seriously dampened investor confidence, greatly reduced the Chinesecapital market efficiency, and finally hindered its healthy development. In2006, Chinapromulgated a new《business accounting standards》, it aims to standardize enterpriseaccounting measurement and disclosure act to improve the quality of accounting information.However, simply relying on a series of high accounting standards, the quality of accountinginformation can’t be effectively improved, it also has many other factors which influence it,while the main influence comes from corporate governance. Corporate governance andaccounting information disclosure are based on Agency problem, so, there must be closeimmanent connection between them. As the core of corporate governance structure,ownership structure determines the pattern and efficiency of corporate governance, so, it issure that ownership structure will produce far-reaching effect to accounting informationquality. As a special kind of ownership structure, the Pyramid Ownership Structure existsgenerally in China’s listed companies. In Pyramid, the ultimate controlling shareholders use asmall amount of capital input to master the actual control power of the company, including thecontrol of information-producing process, therefore, the quality of the listed company’saccounting information will inevitably be affected by the impact of ultimate controllingshareholder. Based on the capital market of our country, the article has researched therelationship between the characteristic of the ultimate controlling shareholder and the qualityof accounting information, which aims to optimize the governance structure of listedcompanies and improve the quality of accounting information.This study used a mixed analysis method of theoretical and practical. At beginning,based on a large number of domestic and foreign literature, we refined a series of relatedresearch methods and conclusions on the ultimate controlling shareholders and the quality ofaccounting information. In the theoretical analysis, first, we analyzed the theory about theultimate controlling shareholders and the quality of accounting information, and then basedon the incomplete contracts theory and asymmetric information theory,we analyzed howultimate controlling shareholders behavior influenced the quality of accounting information,at last we proposed three hypotheses from the three dimension (ownership attribute, control levels and degree of separation) of ultimate controlling shareholders’ features:(1)In the listedcompanies under central government control, quality of accounting information is better; Inthe listed companies under local government control and natural control, accountinginformation quality is poorer.(2) In the listed companies under natural control, the number ofcontrol layer is significantly negative to the quality of accounting information, while, in thelisted companies under government control,the correlation is significantly positive.(3) theseparation degree between the control rights and cash flow rights is significantly positive tothe quality of accounting information. In the empirical analysis, using the surplus--rewardmodel and selecting Shanghai A share listed company data in2010,we testified the correlationbetween the characteristic of the ultimate controlling shareholder and the quality ofaccounting information. Finally, according to theoretical analysis and empirical test, in orderto optimize China’s listed company governance structure and improve the quality ofaccounting information,we put forward some policy suggestions, which mainly divided intoexternal supervision and internal system perfection. External regulation include:(1)Improving the disclosure system of actual controllers;(2) Strengthening the externalsupervision;(3) Optimizing the financing environment of private enterprise;(4) Developingthe institutional investors. Internal system perfection includes:(1) Improving the internalbalance mechanism of shareholders;(2) Improving the internal controls of listed company’saccounting information system;(3) Introducing foreign capital in the financing process...