Research On The Impact Of Founder’s Turnover On Accounting Conservatism

Founder’s specific assets such as personal reputation, managerial authority and social relations provide enterprises with contract execution, property protection and other aspects of advantages. These specific assets also have a significant effect on the establishment of core value and operation model, and play a particularly important role in survival and development of enterprises. Academia pays high attention on the impact of founder’s turnover on enterprises’ accounting behaviors especially accounting information quality. Based on the institutional background and market environment of Chinese listed companies, this dissertation uses theoretical and empirical analysis methods to investigate the impact of founder’s turnover on accounting information quality from the perspective of accounting conservatism. By comparing the impact of founder’s and hired executive’s turnover, founder’s regular and irregular turnover and their background such as age, tenure and education levels on accounting conservatism, the dissertation aims to gain some conclusions with theoretical and practical values, and puts forward some relevant policy suggestions.The dissertation is divided into five parts:Chapter1introduces the research background and significance, the literature review at home and abroad, research thoughts and methods, innovation and characteristics. Chapter2is theoretical analysis. In this chapter, the dissertation defines related concepts of research objects, and states the theoretical basis such as agency theory and managerial power approach. In chapter3, the dissertation introduces the background of Chinese listed companies and market environment firstly, then analyzes the influential mechanism of founder’s turnover on accounting conservatism, and puts forward research hypotheses finally. The chapter4is the empirical study. Using Chinese listed companies from2001to2012as the sample, the dissertation investigates the impact of founder’s turnover on accounting conservatism with the application of Basu(1997) earnings-returns model and Ball and Shivakumar(2005) income persistence model. At last, the dissertation makes the conclusions and suggestions. The conclusions show that:(1) Founder’s turnover has a significant impact on accounting conservatism. The accounting information of listed companies would be more robust when the founders change.(2) Compared with hired executive’s turnover, the positive impact of founder’s turnover on accounting conservatism is more significant.(3) The positive promoting effect of founder’s irregular turnover on accounting conservatism is significantly higher than the effect of founder’s regular turnover.(4) Founder’s age and tenure play a significantly negative influence on the accounting conservatism before founders’ departure, while the impact of education background on accounting conservatism before founders’ change is not significant.