Effect Of Internal Capital Market Operation Of Chinese Listing Corporation On Accounting Earnings Quality

In China, the listed company that usually adopts a pyramid shareholding structure and its equity is generally more concentrated, which exists serious double principal-agent problems. Stakeholders who have advantages of information and equity may grab the interests from other stakeholders through internal capital operation. They may manipulate the accounting information, which could affect earnings quality. Therefore, there has strong significance to protect the interests of the investors and supervise the management behavior, after verifying whether the double principal-agent problems will influence the earnings quality through internal capital market operation. There are little literature explore that problem in China. Based on previous research, this paper takes the internal capital market as the mediator, and built a frame work and model which covers dual principal-agent conflict, the internal capital market, and the earnings quality, which has strong significance to protect the interests of the investors and supervise the management behavior.This paper takes the 120 listing corporations from 2011 to 2013 as samples, and makes some empirical tests using the static panel data model, the panel Logit model and other methods. The results of empirical research are as follows:First of all, the double principal-agent conflict has a significant negative effect on earnings quality. Relative to the state-owned holding company, with the entrusted agency conflicts between holding shareholders and small and medium-sized shareholders, the earnings quality of private holding company declines more, and with the entrusted agency conflicts between the controlling shareholders and management, the earnings quality of private holding company declines less.Secondly, the double principal-agent conflicts could induce the occurrence of internal capital market operation and the increase of its volume. Relative to the state-owned holding company, as the principal-agent problem between the controlling shareholders and small and medium-sized shareholders, the existence of internal capital markets and its trading volumes of private holding company are larger, and with the principal-agent problem between the controlling shareholders and management, there has no difference.Thirdly, the internal capital markets transactions exist partial mediation effect in the process of the dual principal-agent problems impacting on earning quality; and compared with the state-owned holding company, with the increase of trading volume, the earning quality of private holding company has a bigger drop.