Family Control,the Proportion Of Independent Directors And The Earnings Management

With China’s capital market development,the family listed companies are also developing rapidly,and has become the most common form of organization,its proportion is increasing.By the end of 2014,the proportion of family enterprises in private enterprises reached 80.7%.Thus,the performance of the family enterprise and economy of our country is closely linked.In addition,in order to achieve the listing,issuance of new shares and raise funds,listed companies will modify their financial statements by means of earnings management.Of course,family enterprises will face similar problem.Review of the literature,this paper found that,Most of the literature focuses on the relationship between control rights in family business and corporate value,corporate decision-making and R&D investment.There is little literature focus on the research of relationship between the characteristics of family enterprise control rights and the earnings management.Based on summarizing the domestic and foreign research status,this paper uses 531 listed private enterprises listed in the 2010 ~2014 year as the initial sample,which is divided into two types of family and non family businesses,and analyzes whether the different degree of earnings management of the two types of enterprises.Then,based on the 440 family businesses as the research subject,this paper further analyze the influence of family control characteristics on earnings management.In addition,through the review of literature,this paper use the separation degree of control rights and cash flow rights and ownership concentration to measure the characteristics of family control;On this basis,this paper further discusses the role of independent directors on the relationship between family control and earnings management,and discuss the supervisory role of independent directors are able to play.Through the establishment of model and regression analysis,results show that:(1)In China’s private enterprises,whether family or non family business,there is the phenomenon of earnings management,which crosses various industries.At the same time,this paper also finds that the degree of earnings management of family enterprises is not significantly higher than that of non family enterprises.On the contrary,there is no significant difference of the degree of earnings management in the two types of private listed companies;(2)The separation degree of the control rights and cash flow rights has a negative effect on earnings management,that is to say,the direction of change is opposite;(3)The ownership concentration has a positive impact on earnings management,that is to say,the direction of change is same;(4)After joining the independent directors variable,the relationship between family control characteristics and earnings management has not changed significantly.That is,independent directors did not play a regulatory role.In addition,this article makes a further verification-robustness test,the results are not inconsistent with the empirical results,and strengthen the stability of results.