Government Control,Executive Turnover And Financial Report Quality

This paper uses the sample of342government-controlled listed companies and742non-government-controlled listed companies in the securities market of China from2004to2010to examine government intervention effect on the performance of corporategovernance In the process of the reform of state-owned enterprises.According to the resultsof this paper,the company’s executives change has an important influence on financialreporting quality.There is a significant negetive correlation between audit opinion andexecutives change.And the type of the audit opinion also can be affected by the companyunder the government control.There is a significant positive correlation between auditopinion and government control.That is to say,the financial report quality of thegovernment-controlled listed companies is significantly higher than thenon-government-controlled listed companies’.But when a change of the top executives inthis kind of company occurs,the behavior of the executives can not be under effectivesupervision during the special period and in the special circumstances.So the lever of thefinancial report quality will significantly decline.Despite the political costs can produceeffective restriction to the enterprise,executives turnover would break therestriction.Executives change decisions,therefore,are not positive governacebehaviors,especially for the government-controlled listed companies.This paper furtherfinds that after the government-controlled listed companies change executives,it doesn’tappear a mass of earnings management.This suggests that,the low-quality financial reportsdoesn’t attribute to earnings management.Generally speaking,in partial privatisation,although the community is expected toreduce government intervention,the necessary government intervention is in favor ofachieving effective allocation of resources.