Executive Power,internal Control And Accounting Conservatism

At the beginning of the 21 st century,after a series of financial fraud cases such as the ?Enron Incident?,the U.S.government promulgated the Sarbanes-Oxley Act to carry out a series of reforms of listed companies' accounting,and for the first time formally established the internal control auditing system and strengthen the Internal control information disclosure mechanism in the form of legislation.In recent years,China's financial fraud cases such as the ?Green Land? and ?Wanfu Department of Health? have also made China speed up the control and regulation of internal controls.As an important means of corporate governance,internal control can regulate and supervise the company's operations and management.The company's internal control system,which is well-established and can be effectively implemented,can inhibit management's earnings management behavior,timely identify losses and delays,recognize revenues,improve the soundness of financial accounting,and can demonstrate high-quality financial information to stakeholders.With the gradual maturation of the two-power segregation system and the fact that China is a country that advocates a power system,the problem of high-level executive power concentration within the company is widespread.The characteristics of individual executives and their own powers will affect companies.The establishment and implementation of internal control procedures have a certain degree of influence,affecting the business decision-making of various matters of the company and the quality of the financial reports disclosed to the public.Based on this background,this paper explores the impact of executive power on the foundation of internal control and accounting conservatism.Based on principal-agent theory,contract theory,management power theory and high-level echelon theory,this thesis selects China-Shenzhen A-share motherboard non-financial listed companies from 2014 to 2016 as research samples,using the company's internal control and risk management database.The internal control index is used to measure the internal controls.By using the ?Basu? model to verify the existence of accounting conservatism,and on this basis,the model is extended to verify the relationship among executive power,internal control,and accounting conservatism.The thesis uses the principal component analysis method to comprehensively measure executive power,further study the impact of executive power on internal control and accounting conservatism by selecting the size of the company,the book value of equity market value,financial leverage and industry,and annual characteristics as the control variables,and selecting seven indicators of the part-time situation of the unit such as the degree of equity balance,institutional investors holding shares,two-time concurrent assignments,board of directors,senior management time,senior executive age,and other situations of part-time staff.The thesis finds three conclusions by empirical research: First,the listed companies in China have an overall accounting conservatism.Second,the internal control of listed companies has an enhanced role in accounting conservatism.Third,the concentration of executive power will weaken the enhanced effect of internal control on accounting conservatism.