Research On The Influence Of Listed Family Enterprises’ Board Governance On Earnings Quality

By virtue of the “domination of a single shareholder”, the special control over the enterprise by the family, and the important role of information disclosure in capital market, the earnings quality of family enterprises has become a research hotspot. Meanwhile, board governance as the core of internal corporate governance is a key factor that influences the quality of an enterprise’s earnings, and the difference in board governance among listed family enterprises influences the quantity and quality of earnings to different degrees.This paper takes the 491 family-controlled enterprises that were listed on the Shanghai Stock Exchange and the Shenzhen Stock Exchange during 2008-2012 as samples, and studies how board governance influences their earnings quality from four dimensions, namely the structure, independence, behaviors, and stimulation level of the board of directors. In total 9 variables are subject to the normative correlation research with earnings quality. In the modified DD model, absolute residual serves as the substitution variable of earnings quality. Besides, explanatory variables and control variable are defined respectively and the measurement methods are also described to establish a correlation evaluation model between board governance and earnings quality.As indicated by the results, proportion of independent directors,educational level of the board of directors are positively correlated with earnings quality; the board size, leadership structure, proportion of family members who act as directors,shareholding ratio of family members who act as directors and proportion of directors without remuneration are positively correlated with earnings quality, while Attendance rate of independent directors,requency of board meetings are not significantly correlated with earnings quality.Based on the above research findings, this paper puts forward the following policy suggestions, including improving the board structure to weaken the “family control” degree, perfecting the restriction mechanism for independent directors and improving the operating mechanism of audit committee, enhancing the qualities of board members and establishing a standard board meeting system, strengthening the accountability of directors, and perfecting the incentive mechanism for independent directors.Therefore, to study and analyze which factors of board governance influence the earnings quality of listed family enterprises and to apply the results to correspondingly adjust and improve board governance will partly ensure the good quality of earnings.