A Study Of Financial Restatement Characteristics And Influencing Factors In Chinese Listed Companies

Since the1990s, the financial restatement phenomenon in the international market caused the destruction of the wealth of shareholders of listed companies and gave a serious blow to investor confidence in capital markets.. The most representative case is Enron’s collapse. And the new methods of financial fraud soon appeared in Chinese capital market.Financial Restatement means that the listed companies by themselves or the auditors, regulators has released a statement to correct errors in previous financial reports. Financial restatement is meant avoiding investors to make the wrong decision by correcting financial report information. It is the purpose to improve the quality of accounting information disclosure. However, due to self-interest management, as well as the lack of internal control system, the financial restatement changed into new methods of earnings management. Because the financial restatement is more confidential, the destruction degree of capital markets is far more than before. In the U.S. market "Enron event" is the most typical cases, and there is "YinGuangXia case" for Chinese market. Investors are powerless in front of the fraud of listed companies.There are some special financial restatement features in China’s capital markets. The way to use the supplement and correction announcements to correct the information is also known as "patch" of annual report. But recently, the company’s performance "Changing face" happens before and after financial restatements are common in the capital market, every year "suddenly turn hostile" king will appear in the media. Accounting information quality was destroyed by financial restatement.Based on financial restatement firms in2010to2012, this paper will do analysis to China characteristics to find the new trend of financial restatements phenomenon in China’s capital market. On the basis of dimensional analysis, this paper takes the principal-agent theory as the research foundation, collects and 2010a-share market financial restatement companies and the restatement of relevant data, by using Logistic multivariate regression model, the driving factors for the empirical analysis on the phenomenon of financial restatement and inspection. In the end, the author hopes that through the analysis of characteristics and motivations of financial restatement. The author hopes to promote the development of the financial restatement research, help the establishment of the financial restatement system and protect the rights and interests of investors.The first part:introduction. Financial restatements are briefly introduced, and the background of financial restatement, the writing purpose and the writing frameworks and innovation are showed.The second part:literature review and institutional change. For domestic and foreign literature review on the research of financial restatement, mainly around the research emphasis in this paper the characteristics and driving factors in the literature review of financial restatement; Introducing the role of the existing financial restatement system and deficiency. With a review of the literature and the explanation of the institutional change, clearly define the scope of financial restatement phenomenon in this paper.The third part:the financial restatement of dimensional analysis. By2010to2012, three years in A row to the latest data on China’s a-share market phenomenon of financial restatement multi-angle descriptive statistical analysis, trying to scientific and effective sorting financial restatement content, combined with descriptive statistical results further to explore the operation of financial restatement mechanism. In the end, the summary of the financial crisis after the new characteristics and new trend of our country’s financial restatement phenomenon.The fourth part:the financial restatement drivers for research. In2010a-share listed companies in our country as the sample data of annual report restatement phenomenon is the driving factor of empirical research and analysis, understand nearly three years financial characteristics, the shareholding structure, inside governance mechanism and outside governance mechanism and the annual report restatement, validation studies in the literature, to confirm the financial restatements result of dimensional analysis.The fifth part:conclusion and suggestion. Summarized in this article, descriptive statistics and the empirical conclusions and deficiencies, the further research direction is put forward. According to the conclusions of this paper, respectively from the regulators, listed companies to regulate the behavior of financial restatement and protection of rights and interests of investors are also proposed.Financial restatements multi-dimensional analysis found that, governance problem and related party transactions and retained earnings of financial restatement announcement more than income, cost and valuation become the main content of financial restatement in recent years. At the same time, our country financial restatement is mainly driven by external supervision strength, weak internal governance mechanisms of listed companies is voluntary financial restatement and less than America,In this paper, empirical studies have found that financial restatement of the company’s financial characteristics, the characteristics of equity and external governance mechanism and significant correlation in the prevalence of financial restatement, and the internal governance mechanisms, such as board size, have a weak correlation to financial restatement.Contribution of this paper lies in the characteristics of financial restatement classification method is a new attempt, after the financial crisis under the background of era characteristics of our country’s financial restatement phenomenon has carried on the detailed describe. At the same time, verify the financial characteristics of listed companies, equity institutions in recent years. And this paper show the way of the inside governance mechanism and the outside governance mechanism to influence the phenomenon of financial restatement. The research enriched the content of financial restatement research in China, can provide certain reference for the later researchers.