CEO Risk Preference?Selfish Motive And Financial Restatement

Since 2006,the Ministry of Finance has revised the relevant standards of financial restatement and perfected it,the phenomenon of financial restatement in capital market has not been effectively contained.According to relevant statistics,the scope of financial restatement at home and abroad has been expanding,from the main board to the small and medium-sized board,gem,the frequency is also increasing year by year.Compared to A-share listed companies,small and medium-sized listed companies are smaller in size and CEO has a more significant impact on the company's business decisions.In addition,the relevant legal constraints in China are limited,So,the phenomenon of financial restatement is especially serious and the bad consequences can't be ignored.The listing proportion is 39.12% of the total number of listed companies in which the financial restatement occurred in the small and medium-sized board listed companies before 2012,However,In 2015,financial restatement was the most frequent and the frequency reached 98 times.Moreover,the proportion is up to 23.22% and the amount is astounding and thought-provoking.Abnormal financial restatement of listed companies seriously affects the quality of financial information,dampens the enthusiasm of investors and undermines the effectiveness of capital markets.Compared with the financial restatement in the western countries,the financial restatement in our country is more caused by the egoism of the management.Therefore,in order to effectively reduce the probability of the financial restatement of small and medium-sized listed companies and to reduce the current situation of the ineffectiveness of the capital market,this article is based on the CEO Perspective and empirically studies the influence of CEO risk preference and self-interest motivation on financial restatement.The conclusion of this paper is significant for small and medium-sized listed companies to improve the CEO selection system,improve the incentive system and optimize the equity arrangement,so as to effectively reduce the financial restatement rate and slow down the current situation of weak capital market efficiency.This paper adopts the method of combining normative research with empirical research and takes the small and medium-sized board listed companies as the research sample from 2012 to 2016 and selects CEO equity incentive,shareholding ratio and salary incentive as a measure of CEO self interest motivation,which empirically tests the influence of CEO risk preference and self-interest motivation on financial restatement.On the basis of this,this paper further investigates the regulating effect of corporate social responsibility information disclosure on the above relationship.Through the theoretical analysis of higher-order echelon theory,principal-agent theory,information asymmetry theory and reward contract theory,this paper puts forward the related research hypotheses between CEO risk preference,self-interest motivation and financial restatement,and applies logit multiple regression.The following empirical results are obtained.First of all,the higher the risk preference,the more likely the financial restatement will occur in the enterprise where CEO is located.Companies with equity incentives to CEO are more likely to perform financial restatement.The relationship between CEO shareholding ratio and enterprise financial restatement behavior is U-shaped.When the shareholding ratio is low,the possibility of financial restatement decreases with the increase of shareholding ratio.However,once the CEO shareholding ratio reaches a higher level,the increase of the shareholding ratio will promote the occurrence of financial restatement.CEO compensation incentive will restrain the occurrence of financial restatement,which means that the higher the salary incentive,the lower the probability of financial restatement in the enterprise where the CEO is located.Secondly,the disclosure of corporate social responsibility information will regulate the above relationship.The concrete manifestation is it will reverse adjust the relationship between CEO risk preference?CEO equity incentive?CEO shareholding ratio and financial restatement,and plays a positive role in regulating the relationship between CEO compensation and financial restatement.Possible innovations in this article are that research perspective innovation?research content innovation and research skill innovation.(1)The existing literature on the influence of executive characteristics on financial restatement focuses on the background characteristics of executive team.However,based on the CEO perspective,this paper discusses the impact of CEO risk preference and self-interest motivation on financial restatement.(2)The current research results of scholars focus on the financial restatement of listed companies on the main board,but the problem of financial restatement of listed companies on small and medium-sized boards is more difficult.Therefore,this paper selects the Shanghai and Shenzhen small and medium sized board listed companies as the research object.Besides,the existing literature rarely discusses the impact of corporate social responsibility information disclosure on corporate financial restatement,however,this paper examines the regulation effect of corporate social responsibility information disclosure on the above-mentioned relationship.To a certain extent,this paper fills up the blank of the research on this issue in related fields.