Research On The Factors Influencing Financial Restatement Of Chinese Listed Companies

Financial report plays an important role in getting financial information of listed companies for investors.Financial report can not only record the profitability of enterprises,but also provide an important reference for decision makers and managers.While China's economy is rapidly taking off,Some problems rarely seen before are slowly developing and some issues concerning financial report have emerged.Among all the emerging issues,financial restatement is one of them.Recently,listed companies frequently release various types of annual financial reports to supplement and correct their previous announcements,which shows that there are some problems in those previous financial reports and announcements.This casts doubts on the authenticity and accuracy of financial reports which is called financial restatement.This article aims to explore the main factors that affect the financial restatement of listed companies and promote the research of financial restatement in China.First of all,this paper reviews the researches of some scholars at home and abroad on the factors that influence the financial restatement.Secondly,besides the definition of the concept,purpose and criterion of financial restatement,this paper applies theories,such as principal-agent theory,asymmetric information theory,earnings management theory,corporate governance theory,internal control and independent audit quality assurance theory and theoretically analyzes the existence and problems of financial restatement.Thirdly,this paper conducts a statistical analysis on the companies which issued financial restatements in A shares in Shanghai and Shenzhen from 2014 to 2016.Based on the theoretical and statistical analysis above,the author analyzes the internal and external factors influencing the financial restatements of listed companies.Internal factors include company performance,organizational structure,ownership structure;External factors include audit opinion,audit quality,supervision on Exchange,and accordingly,the author puts forward research hypotheses.Finally,while taking the listed companies in Shanghai and Shenzhen stock exchanges which issued the financial restatement announcement between 2014 and 2016 as the research sample,the author applies descriptive statistical analysis,paired sample T test,Pearson correlation test,binary logistic regression analysis to find out the correlation between independent variable and financial restatement and its impacts on financial restatement.The author finds that company performance,organizational structure,ownership structure,audit opinion are important factors affecting the financial restatements of listed companies in China.Improving the profitability and growth ability of a company is conducive to controlling the financial restatement from the very beginning;Ensuring the proportion of independent directors in the board of directors will help optimize the organizational structure and reduce the occurrence of financial restatement;Increasing the proportion of institutional investors holding shares can contribute to improve the supervisory performance of institutional investors.Ensuring the accuracy of the company's financial information disclosure and the auditing opinions of the annual report of the Company will be read as "standard unqualified opinions" could effectively avoid the occurrence of financial restatements.This paper enriches the researches on the factors that affect the financial restatement of listed companies in our country and this study provides latest statistics and makes a new attempt to classify the influencing factors on financial restatement.The author introduces a new explanatory variables in the empirical study and expands the research scope on the factors that affect the financial restatement of listed companies in China,aiming to improve the financial information quality of listed companies in our country and reduce the possibility of occurrence of financial restatement.Meanwhile the author provides empirical data for the decision maker of investment and laws and regulations related to financial restatements.