The Research On The Relationship Between Characteristics Of Secretary Of The Board Of Directors And Financial Restatement

In recent years, the phenomenon of financial restatement occurs frequently in listedcompanies of China, effecting adversely to the securities market. In fact, significantaccounting errors correction is intended to provide more accurate and comprehensiveaccounting information, so as to protect the interests of stakeholders. However, inpractical operation, the effect is unobvious. The retrospective adjustment method iswidely adopted by listed companies of China in financial restatement operation due toits insignificant character to current profit or loss, which is usually used by companyrunners as a tool to adjust current profits for "distribution needs". Financial restatementwill not only damage the interests of stakeholders, reduce the quality of accountinginformation disclosure, but also lower the company’s reputation, and ultimately harmthe interests of the company itself. One of the more profound reasons leading tofinancial restatement is structural imperfect and inadequacies in governance of acompany. Therefore, the study of relationship between governance structure ofcorporation and financial restatement is an important issue to regulate informationdisclosure and protect the interests of stakeholder.Secretary of the board of directors is the window of listed companies to the outsideand is responsible for information disclosure, but its effect has always been ignored. Therevised Law of corporation went into effect in2006, establishing a special section tocomplement the provision of secretary of the board of directors. It’s the first time tomake the executive status of secretary of the board of directors clear legally. The sectionincludes the responsibilities of secretary of the board of directors. The most importantone is information disclosure. Exerting the function of secretary of the board ofdirectors fully can increase the level of governance in listed companies and improve thequality of information disclosure. The empirical researches involving the function ofsenior executives are mainly focused on chairman, general manager and independentdirector, seldom on secretary of the board of directors. Therefore, starting withcorporate governance structure and on the eye of secretary of the board of directors, thispaper researched the relationship between secretary of the board of directors andfinancial restatement by empirical research methods.The main line of this paper is "find problem-analysis problem-solve problem". Firstly, the importance of research on status quo of financial restatement is theoreticallyanalyzed; and then based on top management team, commissioned agency theory,corporate governance theory, transaction cost theory and asymmetric information theory,financial restatement is further analyzed, revealing the important role of secretary of theboard of directors in financial restatement behavior. Through three years data（2010-2012） of listed companies in Shanghai and Shenzhen A-share market,296companies involving financial restatement behavior and296not-involving companieswere selected as study samples. Statistical analysis were proceeding, using pairedsamples T-test, correlation analysis and binary logistic regression analysis methods.Through statistical analysis results, the impact of secretary of the board of directors ofChinese listed companies on financial restatement was revealed.The main conclusion is as following:1.the age of secretary of the board of directorsand financial restatement presents a significant negative correlation, which is significantunder the10%level, meaning that old secretary of the board of directors can play acontrolling role in financial restatement probability;2.holding a concurrent post in thecompany as a secretary of the board of directors and financial restatement presents asignificant positive correlation，which is significant under the5%level;3.secretary ofthe board of directors with financial experience and financial restatement presents asignificant negative correlation, which is significant under the1%level;4.therelationships between other characteristics selected and financial restatement are’tverified.The contribution of this paper lies in researching the relationship between thecharacteristics of secretary of the board of directors and financial restatement in listedcompanies, selecting6variable quantities, analyzing by logistic regression model andthen having a conclusion. In the end, considering our national conditions, this papergives some advice.