| Listed companies with financial restatement in our country is in a high proportion all the time, which rise rapidly in recent three years. As the researches domestic and overseas show, fianancial restatement always bring negative market effect. Why so many companies are still keen to restate their financial reports while restatement do harm to them? If there are the solutions to settle the financial difficulties, this phenomenon can be explained reasonably.This paper studies the relationships of the fianacial restate, executive turnover behaviors and auditfee, mainly include the influence of financial restatement on auditfee, how fianacial restatement affect executive turnover, and whether executive turnover do impact on the relation between financial restatement and auditfee. This study offers explanations from the point of view of external audit market how the market response to the restate behavior, and what action those companies do to cope with the market response, whether the solutions are effective as well. Hereby, this paper is based on all listed companies in A share market in Shanghai and Shenzhen Stock Exchange from year2007to2012, and choose the companies which announce the restated financial reports in Cninf website and do the matches as the research sample. As the research show, be controlled in the same conditions, external auditors price higher to the restated companies than the matched companies. Therefore, it’s obvious that financial restatement ruined the companies’ reputation. Those which announce the restated financial companies choose to turnover their executives as the method to restore reputation, so the proportion of executive turnover is much higher than the matches. Is the resolution effective? The answer is no. The research shows that auditfee changes hardly, whether companies choose to turnover executives or not, supporting the Scapegoat theory. And this is just from the audit market angle which is the biggest innovation this paper. |
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