Government Objectives,Pyramid Ownership Structure And Accounting Robustness

Pyramid ownership structure widely exists in China's listed companies.As one of the important characteristics of the capital market,it has a significant impact on the operation of China's capital market and corporate governance.Therefore,it is of great significance to study the causes and consequences of the pyramid ownership structure.In terms of the causes of the pyramid ownership structure,the mainstream views in academic circles are "the theory of private interests of control" and "the theory of financing advantages".However,some scholars have proposed that the formation of the pyramid ownership structure of local state-owned enterprises in China is due to the decentralization of power by local governments.Because of our unique political and economic system,governments at all levels can exert important influence on local state-owned enterprises through administrative means to achieve their ruling objectives.The pyramidal layers is the vertical dimension of the pyramid ownership structure.Under the pyramid ownership structure,our government can relax the control of subordinate enterprises by introducing the intermediate hierarchy,or strengthen the control by reducing the intermediate hierarchy.So,for what purpose will governments at all levels strengthen or relax their control over their subordinate local state-owned enterprises? What role does the government's economic and social objectives play in the establishment of the ownership structure of local state-owned enterprises? The existing literature seldom explores the causes of the pyramid ownership structure of local state-owned enterprises from the perspective of government objectives.The conclusion of this problem will be an important supplement to the causes of the pyramid ownership structure of stateowned enterprises.Although the pyramid ownership structure plays an important role in the decentralization of local government,local state-owned enterprises will have more autonomous decision-making power,at the same time,it will also bring more difficulties in supervision and agency costs.Therefore,it is of great significance to fully understand the consequences of the pyramid ownership structure of local stateowned enterprises.Previous studies have studied the consequences of pyramid structure of local state-owned enterprises from the perspectives of political cost,over-investment and probability of violation,but few studies have analyzed the consequences from the perspective of accounting information quality.Accounting robustness is one of the important principles to guarantee the quality of accounting information.In order to create a better investment and financing environment and make the capital market develop healthily and considerably,it is necessary to improve the level of corporate accounting robustness.Therefore,after clarifying the impact of government objectives on the pyramid ownership structure of local stateowned enterprises,this paper chooses the perspective of accounting robustness to further analyze the consequences of the pyramid ownership structure.Based on the above analysis,this paper takes the pyramidal layers data of local state-owned enterprises in China from 2008 to 2016 as the research sample,combines theoretical analysis with empirical research,takes pyramidal layers as the longitudinal index to measure the pyramidal ownership structure,explores the impact of government objectives on the pyramidal layers of local state-owned enterprises in China,and further investigates the influence of pyramidal layers on accounting robustness.The main conclusions of this study are as follows:(1)In our local state-owned enterprises,the government will promote the process of Regional Marketization and decentralize control power for the purpose of economic development.The higher the score of the market-oriented process in the area where the enterprises are located,the stronger the decentralization of government is,the more pyramidal layers of local state-owned enterprises are.(2)In order to achieve the employment target of its social goal,the government will strengthen the control of the local state-owned enterprises when the unemployment rate is high,and the pyramidal layers between the government and the local state-owned enterprises will decrease.(3)In our local state-owned enterprises,there is a clear negative correlation between the pyramidal layers and accounting robustness.The complex pyramid ownership structure will result in the decline of accounting robustness.The main contributions of this paper are as follows: firstly,it provides a new research perspective for the causes of the pyramid ownership structure of local stateowned enterprises,expands the research direction of the causes of the pyramid ownership structure.Secondly,it enriches the relevant research on the consequences of the pyramid ownership structure of local state-owned enterprises.Thirdly,it has certain practical significance.The conclusions and suggestions can help local stateowned enterprises optimize the pyramid ownership structure,and provide new clues and directions for improving accounting robustness of local state-owned enterprises.