Study On The Impact Of Board Characteristics On Financial Restatement Under Different Equity Properties

Efficient and reliable accounting information has been regarded as the substructionthat makes capital market function efficiently. Financial reports, especially annual financialreports are the major carriers of information disclosure of listed companies. They are theimportant basis that investors achieve company information to make investment decisions.In China, there are lots of listed companies releasing all kinds of supplement oramendment announcements, which have aroused much negative influence. So suchphenomenon has become the focus of securities supervising department and theoryacademia.From the micro perspective, the quality of specific accounting information disclosureis decided by the internal corporate governance mechanism. Board of directors has been atthe core position within corporate governance mechanism, so that the board of directorshas important responsibilities to improve the quality of financial statements. The corporategovernance in our country is quite special. For the reason that the corporate governancehas displayed respective features, board governance characteristics may be different instate-owned listed companies and non-state-owned listed companies. So the influences onfinancial restatement emerged by the characteristics of board of directors will behave whatkind of differences between the two kinds of companies is worthy to study.This paper uses the equity properties as a starting point, and divides samples into twogroups–state-owned listed companies and non-state-owned companies. We use fivemeasurable indexes of board features as study variables, which are the board size, the rateof independent directors, the dual conditions of chairman and general manager, boardshareholding and share proportions of board of directors, combining normative researchwith empirical research to examine respectively the different correlations between boardgovernance and financial statement in the two kinds of companies.The result shows that in state-owned listed companies and non-state-owned listedcompanies, the board governance behaves significantly different. In the two kinds ofcompanies, the size of board of directors is both significantly negative correlated withfinancial restatement probability. Dual conditions of chairman and general manager are significantly positive correlated with financial restatement. The rate of independentdirectors has negative correlation with the explained variable, and in non-state-ownedlisted companies, this relationship is more notable. Board shareholding is significantlynegative correlated with financial restatement probability, which illustrates that it hascertain incentive function on improving the disclosure quality of accounting information.But in state-owned listed companies, such impact is not significant, and the incentive effectis less than that in non-state-owned listed companies. Share proportions of board ofdirectors are both negatively correlated with financial restatement, but the result is notnotable in both companies. Focusing on the possible reasons that may cause such empiricalresults, this paper makes further explanation and illustration in combination with existingresearches.At length, this paper pays attention to improve preparation quality of financialreports and reduce the occurrence of financial restatement based on the conclusions andanalysis above. Several suggestions have been put forward in line with the actual situationin our country and propose the inadequacies of this paper and future research directions.