An Empirical Study Of Influential Factors On Financial Restatements

Financial restatement is a positive way to improve the information quality which has flaws and omissions in the previous report. However, with the rapid economic growth, financial restatement becomes one of means to misrepresentation, omission of significant information and financial fraud, which impact the reliability of information. Therefore, financial restatement attracts more and more scholars, investors and policy-makers’ attention, and it becomes a study direction in the theoretic and practical field. Only making clear of the causes of financial restatement and finding the effective solutions can we give forward guidance for the laws and policies and theoretical instruction for the improvement of capital market efficiency.In the basis of summarizing of the related literatures home and abroad, analyzing the existing research results and finding the new research perspective, now study the influential factors of financial restatement from the perspective of internal governance (initiative financial restatements) and external governance (passive financial restatements).Through analyzing the differences of influential factors of two forms of financial restatements, can we provide the clues for the causes of financial restatements and forward the suggestions for the nature of restatement and policies making from internal control and external governance. The influential factors of financial restatement include five levels, and they are the corporate financial characters, organization structure, ownership structure, external governance and internal control. After that, putting forward the hypothesis, selecting variables, gathering samples and data, then examining the differences of influential factors of financial restatement from the two perspectives through descriptive statistical analysis, the mean T test, Pearson and Spearman related-coefficient test and logistic regression analysis. Results show that there are three differences of two types of financial restatements. Firstly, profitability has the opposite impact on the initiative and passive financial restatements. Secondly, solvency, ownership concentration and quality of internal control have a great effect on initiative financial restatements, but have little influence on passive financial restatements. Thirdly, audit quality has some inhibiting effect on passive financial restatements, but has little impact on initiative financial restatements. In addition, there are two similarities of two types. Firstly, director size has the largest effect on them, and then are the corporate growth and chairman is served as general manager. Secondly, ratio of independent directors, board meeting times, ratio of state ownership, audit opinion has little influence on the two types of financial restatements.