The Standardized Construction Of Financial Restatement Behavior Of Listed Company

In 21st century today, the security market has evolved into an information market. As the market entities, listed companies shall disclose high quality financial information to ensure investors’ decision-making. In recent years, with the continuous development of Chinese Securities Market, financial restatements by listed companies are becoming more and more frequently and regarded as the psoriasis. This phenomenon has caused attention of market investors, social public and supervision department.In theory, financial restatement behavior is a double-edged sword. On the one hand, the financial restatement can supplement disclosure or corrections for financial reports which a already published. But on the other hand, financial restatement can be used as a mean to extract personal interests by managers. The key is how to make good use of the double-edged sword and give full play to its positive role. However, securities regulators have not given sufficient attention to financial restatement behaviors. In this view, drawing lessons from existing research results, combining with the current security market environment and related regulatory laws, this paper analyzes the related issues of financial restatement, to clarify the internal motivation and external cause of frequent occurrence of financial restatement. Then, we choose TS as representative of construction industry to do a detailed case analysis. Finally, we put forward some suggestions and opinions to perfect the existing regulations. The research shows that the main reasons of financial restatement including earning management, executives’ self-interest, changing of accounting policies and institutional factors. Furthermore, the economic consequences of financial restatement behavior are various, company integrity is questioned, audit work quality is suspected. Then financial restatements will go against the timeliness and effectiveness of financial information, and affect decision-making by investors. Finally, based on our security market environment and conditions of regulations, from the perspective of government regulation, corporate governance and external audit, we put forward some suggestions to regulate the financial restatement behaviors, so as to strengthen its functions of improving the completeness and accuracy of financial information. This helps to improve the quality of the financial information of listed companies, protect the lawful rights and interests of investors, maintaining the normal order of capital market, promote the sustainable healthy development of China’s socialist market economy under the new normal.