Process Of Marketization,Executive Control Rights And Transparency Of Accounting Information

Due to the separation of ownership and management,there is information asymmetry between investors and managers who are responsible for the day-to-day operations of listed companies.Asymmetric information will affect the efficient allocation of resources,which is not conducive to the healthy development of capital market.The improvement of transparency of accounting information can reduce the degree of information asymmetry and the cost of capital,which is significant for promotion of the development,realization of the value of the listed companies and protection of rights and interests of investors.SEC analyzed the quality of accounting information in three basic aspects:transparency,comparability and full disclosure in 1996.It is not long time since our country first established the market economy system.As an emerging market country,region's marketization in China is extremely imbalance which includes political intervention,legal environment and maturity of intermediary organizations.So listed companies in different areas will face different degrees of risk of illegal accounting information disclosure.With the improvement of process of market,the company's external environment will be perfect.That is to say,transparency of accounting information will improve because the cost of breaking the rule is higher in developed areas.For listed companies in the same area,accounting information transparency differs,which is closely related to the internal governance mechanism of listed companies.As an important way to transfer information from management to investors,accounting information is also the basis of evaluation of management performance and efforts.Shareholders and executives have different utility function,which is bound to lead to conflicts of interest between shareholders and executives.As a result of self-profit motivation,executives tend to take advantage of the enterprise contract incompleteness and disclose accounting information in a way that is to their advantage.Executives will have the objective ability to take advantage of incompleteness of enterprise contract seek private profit when executive control increases.And low transparency of accounting information is convenient for executives to hide their power rent-seeking behaviors.In consequence,transparency of accounting information is lower with the improvement of power of executives.As vital internal and external corporate governance arrangements,marketization process,power of executives' control will affect accounting information transparency.Although there are plenty of researches which study the transparency of accounting information in the perspective of corporate governance,there is no definite conclusion about the relationship between the transparency of accounting information and executives' control power.And there are few researches focusing on how process of marketization influence the relationship between the transparency of accounting information and executives' control power.This paper will study the relationship between marketization process,power of executive control and transparency of accounting information through theoretical analysis and empirical methods.This paper will review the domestic and foreign current researches firstly,followed by the overview of the theory involving in the correlation between process of marketization,power of executive control and transparency of accounting information and the theories involved are asymmetric information theory,the principal-agent theory and incomplete contract theory.There are three assumptions in this paper.The first hypothesis is that accounting information is more likely to be transparent in areas with a high degree of marketization.The second hypothesis is that the transparency of accounting information is lower when the power of executives is stronger.The third hypothesis is that promotion of marketization process can weaken the negative correlativity between executives' control power and the company's accounting information transparency.Secondly,this paper attempts to make the empirical test concerning the correlation between marketization process,executives' control power and transparency of accounting information using descriptive statistics,regression analysis and other methods.It is found by analysis of regression that the process of marketization,as a kind of external governance mechanism,can strengthen the transparency of accounting information.In the test,accounting information is more likely to be transparent in areas with a high degree of marketization.Secondly,the power of executive control provides the condition for executive power rent-seeking,which will affect the transparency of accounting information.In the test,the enhanced executives' control power can reduce the transparency of accounting information.Thirdly,the process of maketization can influence the relationship between the power of executive control and he transparency of accounting information.In the test,promotion of marketization process can weaken the negative correlativity between executives' control power and the company's accounting information transparency.On one hand,rules of enterprise contract are stricter with the promotion of marketization process.On the other hand,the promotion of the marketization process can strengthen the binding force the self-implementation mechanism of contract on executives' behavior.The improvement of marketization process not only lowers the possibility but also increases the cost of executives'manipulation of accounting information,which depresses the negative effect of the executives' control power on the transparency of accounting information.Finally this paper summarizes the research conclusions and presents some relevant suggestions for improvement.To ensure the transparency of accounting information,we should improve the construction of the external governance mechanism,ensure the governance effects of independent directors and set up a supervision system which stakeholders like creditors can take part in.Then this paper points out some disadvantages and limits of the research.