Research On The Impact Of Equity Incentive And Internal Control On Financial Restatement Of Listed Companies

The frequent occurrence of financial restatement announcements on stock exchange websites poses certain challenges to the healthy and stable development of the whole stock market.In modern corporate governance,the importance of internal control is particularly prominent.The quality of internal control has a significant impact on the authenticity of financial reporting information quality of listed companies.At the same time,foreign studies have found that equity incentives and financial fraud are inextricably linked.Equity incentive and internal control will have a certain impact on the financial reports of listed companies,so will they have an impact on financial restatement while affecting financial reports? If there is an impact,do they affect each other in the process of influencing financial restatement? In view of the above considerations,this paper does the following research:Firstly,by combing the relevant literature at home and abroad,we can understand the main factors affecting the financial restatement of listed companies: equity incentive and internal control;secondly,through the current situation of financial restatement and related theoretical analysis,we put forward the hypothesis of this paper:(1)the hypothesis of the impact of internal control on financial restatement;(2)the hypothesis of the impact of equity incentive on financial restatement;(3)the impact of equity incentive on Afterwards,2095 data of 419 A-share listed companies in Shanghai and Shenzhen from 2013 to 2017 are selected as the research objects,relevant data are collated,descriptive statistics and empirical analysis are carried out on the research samples,and robustness test is carried out to verify the hypothesis of this study,and finally corresponding conclusions are drawn.This paper divides the index of equity incentive into two variables: the degree of equity incentive and the proportion of executive equity incentive in total shares.Regression analysis was carried out.In order to verify that the impact of equity incentive on financial restatement is restricted by internal control,this paper divides all the samples into two groups: better internal control and worse internal control,and carries on the regression analysis separately.The research finds that:(1)the higher the degree of equity incentive,the higher the proportion of equity incentive to executives,the higher the possibility of financial restatement of listed companies,and the positive correlation between them;(2)the greater the internal control index,the lower the possibility of financial restatement of listed companies;(3)in the sample with poor internal control,the degree of equity incentive and the proportion of equity incentive to executives.The degree of equity incentive has a greater impact on the financial restatement of listed companies.In the sample with better internal control,the increase of equity incentive degree will not have a significant positive impact on the financial restatement of listed companies.It can be inferred that the impact of equity incentive on financial restatement of listed companies is affected by the quality of internal control.Finally,through the analysis of the causes of the above phenomena,this paper proposes to establish a multi-level performance evaluation method,optimize the ownership structure,improve the management equity incentive mechanism,and establish a good,efficient and perfect internal control system.It can be used for reference to reduce the occurrence of financial restatement in listed companies.