Research On The Influence Of Interlocking Directors On Earnings Quality Of Listed Companies

The Board is an important part of the governance structure of listed company, whether its structure is reasonable directly affects the effectiveness of corporate governance play and the directors’ individual decisions and actions also have some impact on company performance, corporate value and earning quality and so on. In recent years, interlocking directorates are more and more popular. It has become a common phenomenon in the board and more and more corporate strategic decision-makers bring it into use. It is an "special relationship" which contact the enterprise with the external environment, which can help companies reduce the uncertainty of resources acquisition and gain long-term development prospects. So researching the interlocking directorates can regulate the behavior of interlocking directorates, and improve the effect of corporate governance and enhance the company’s earning quality. Recently, most scholars research the interlocking directorates from the perspective of corporate performance, corporate value and investment efficiency, on the contrary, few study the relationship between interlocking directorates and earnings quality. So the paper researches the influence of interlocking directorates on earnings quality of listed companies, which give a theoretical reference and practical significance for listed company improving earnings quality.The paper describes the interlocking directorates and earnings quality theory as the point, on the basis of theoretical analysis, selecting 3270 listed companies and 12418 interlocking directorates from 2009 to 2014 as sample data, describing the status of interlocking directors of listed companies preliminarily and analyzing the present situation of earnings quality. Then the paper analysis how interlocking directorates effect earning quality and empirical results indicate that the presence and proportion of interlocking directorates have a positive correlation with earning quality. That is to say interlocking directorates as members of the board of directors can help to improve the earning quality of listed companies. In order to promote the earnings quality of listed companies, the paper present some measures according to the empirical results, for example improving the selection system about interlocking directorates, enacting relevant laws and regulations about interlocking directorates and improving the supervision and incentive system of interlocking directorates.