An Empirical Study Of CPA Independent Director,Accounting Restatement And Analyst Rating

In recent years, more and more accounting restatement appeared in the annual reports of listed companies which seriously disturb the order of capital market and make these companies under a crisis of confidence. As a professional team in capital market, securities analyst has extremely important impact on investors’decision making. There is no doubt that the accounting information of listed companies is the most important reference of analyst ratings. Therefore, a study about accounting restatement’s influence on analyst ratings must be a valuable issue. Coincidentally, the independent directors are liable for accounting information quality in law in our country. Unfortunately, due to the responsibility confusion, complex background, the independent directors are suffering harsh criticism. Because of the professional competence and emphasis on reputation, can CPA independent directors inhibit accounting restatement?This paper take all the listed companies in A shares which released supplementary correction notice of their annual report from 2011 to 2013 as samples, using the method of matching samples, we examed the CPA independent directors’ effect on accounting restatement and the influence of accounting restatement on analyst ratings empirically. The results suggest that CPA independent directors can reduce the occurrence of accounting restatement; Accounting restatement will increase the differences of analyst ratings; Accounting restatement can reduce analyst following and analyst ratings. By introducing a cross term of CPA independent directors and accounting restatement, we find that accounting restatement will reduce analyst following and increase differences of analyst ratings, but CPA independent directors can alleviate this phenomenon by restrain the occurrence of accounting restatement.The innovation of the article:(1) Because of the complexity of the background of independent directors, previous studies did not get a common conclusion on many aspects, this paper focus the background of independent directors on practicing certified public accountant that can help us make a better understanding. (2) The majority of previous study about accounting restatement’s external influence were concentrated on market reaction, this article from the perspective of the analyst ratings is an innovative. (3) With the introduction of cross terms, we studied if the independent directors can optimize analyst ratings by inhibiting the occurrence of accounting restatement. We verified the CPA independent directors’role in the improvement of the information environment of listed companies. At last, we give some valuable suggestions about how to improve the independent director system and regulate the behavior of the listed company information disclosure.