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Related Party Transactions and Earnings Management Research of Listed Companies Based on Corporate Governance

On 22/02/2015, in Economics papers, by rain

This paper first reviews concepts and characteristics of the related party transactions, earnings Management, corporate governance, econometric model of earnings Management, and empirical studies between related party transactions and earnings Management. Secondly, make a descriptive statistical analysis of the status of related party transactions of listed companies of China, and summarize the existing features, and research motivations of related party transactions and earnings management. Thirdly, discuss how internal and external governance mechanisms influent them, and based on this, propose five hypotheses of this text. Finally, form the reference to the results of previous studies, use Modified Jones model as the measure of earnings management, establish a multiple regression model with Controlled Accruals as explanatory variable for empirical research. In the empirical study, select a total of668A-share manufacturing listed companies of Shanghai and Shenzhen board from2009to2011as study sample, first make a descriptive statistical analysis of each variable, draw characteristics of the transactions and earnings management of the Listed Manufacturing Companies. Then, use spss19.0software to verify the five hypotheses proposed in this paper.The empirical results show that:1, it’s clearly that listed companies use party transactions for earnings management;2, listed companies whose top managers in the implementation of equity incentive plan have larger likelihood of using related party transactions for earnings management;3, the possibility to manage earnings in public companies which the controlling shareholder occupies more than50%is not necessarily greater;4, those the first major shareholders equity is less than15%have less likelihood of using related party transactions for earnings management;5, those listed companies whose governance layer been publicly condemned or administrative punished by the listed companies trading securities commission have larger possibility of using related party transactions for earnings management. Finally, based on the results of empirical analysis, make several countermeasures from the governance of corporate governance mechanisms for remediating the behavior of using related party transactions for earnings management.

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The Research on the Relationship between Corporate Governance and Corporate Social Responsibility

On 19/02/2015, in Economics papers, by rain

With the purpose of theoretical analysis and empirical research on the relationship ofprivate listed companies corporate governance structure and corporate Social responsibility, fora new perspective to understand and explore the corporate governance structure and corporatesocial responsibility between the relevant relations, so as to strengthen and improve ourprivate listed companies corporate governance and improve the performance of corporatesocial responsibility to provide data support. In the corporate governance and corporate socialresponsibility based on definition, carding between relationships, believed to strengthen thesocial responsibility of the Enterprise need to guide rational and regulating the behavior ofenterprise managers to achieve. Perfect corporate governance structure, can achieve thecompany stakeholder interests balance and restriction, can make the Enterprise socialresponsibility can be used to effectively fulfill; According to the principle of scientific,systematic principle, purpose principle, concise applicable principle, the feasibility principle,in Shenzhen stock exchange and Shanghai stock exchange listed A shares the private listedcompanies as samples, using2009-2011for three consecutive years of private listedcompany’s data, to select the shareholders’ responsibility, the responsibility of the obligee,the government’s responsibility, obligations to employees and to the consumer theresponsibility five aspects index, using multivariate statistical analysis of the methods of factoranalysis constructs the Enterprise Social responsibility evaluation system; With China’s listed steel companies for empirical research object, the board of directors governance characteristicsfor explanatory variable, with the size of the company as control variable, and build themultiple regression model, using SPSS software to on corporate governance and corporatesocial responsibility relationship. The research results show that the board of directorsgovernance characteristics of private enterprises listed company social responsibility has theinfluence of different level.

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Research on Evaluation System of Corporation Governance Based on Human Capital Theory

On 11/02/2015, in Economics papers, by rain

With the enhancement of human capital negotiations, human capital owners are playing an increasingly important role in corporate governance, but corporate governance evaluation system based on the principal – agent theory of physical capital neglected the importance of human capital owners. Broken through the perspective of physical capital, corporate governance evaluation system was proposed from a newer and broader perspective of human capital to meet the requirement of Chinese corporate governance practice.The modern corporate governance is the common governance of physical capital owners and human capital owners through a series of internal and external governance mechanisms and index system and evaluation model of corporate governance are constructed based on human capital theory. Firstly, on the basis of human capital theory, the logic rationality of human capital owner’s participating in the corporate governance is demonstrated, which is basis of this argument. Secondly, pricing model of different human capital is analyzed based on the measurement of the value of human capital. Then, based on pricing and converted into shares of human capital, the company’s internal and external mutual governance that both the human capital owners and physical capital owners involved into were studied. Finally, as the focus of the whole paper, according to the six aspects of the ownership structure and shareholder rights, board structure and operation, structure and functioning of the board of supervisors, the disclosure of information, human capital incentive and restraint, and external governance, corporate governance evaluation index system based on human capital theory is designed, and a brief description of each indicator is properly given. In accordance with characteristics of indicators, comprehensive evaluation model of corporate governance is established based on principal component analysis, analytic hierarchy model and unascertained synthetic evaluation system. This paper tries to bring a very significant effect on the evaluation of corporate governance.

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Study on the Ownership Structure and Corporate Governance Relations of Listed Companies in China

On 22/01/2015, in Economics papers, by rain

Ownership structure is defined as the total share capital of joint-stock companies, stock investors have a variety of stock types and quantities of all the shares in the company’s distribution. Listed companies in China, because of the special history, there is distortion of the situation tradable state-owned shares “dominance” of the issues outstanding, hinder the Economic development stably and rapidly in China.ownership structure is the basis for corporate governance, corporate governance is the manifestation of ownership structure. In recent years, ownership structure and corporate governance has been a hot topic in academia and industry topics, especially in 2005, China has implemented a split share structure reform, reform of split share of capital market development as a landmark event, so people would pay more attention to the ownership structure and corporate governance.The author contracts the situation before the split share structure reform and after the split share structure reform in China.and reference the foreign companies’ different models of governance, to identify their own shortages and find the reasonable opinions and suggestions. First I will introduce the ownership structure and corporate governance concepts and literature reviews briefly, then study on the problems before the reform and the achievement after it, particularly, we should learn the advanced experience form foreign countries for our own use,and focus on the future of companies, so that enterprises will have long-term development. Select the return on equity (ROE) as a measure of corporate governance performance indicators, then use the statistical software SPSS 13.0 to make linear regression analysis to analyze how the ownership structure impact on corporate governance structure, test overseas shares, legal person shares, tradable shares, proportion of the largest shareholder, the proportion of the top five shareholders associated with the ROE respectively.at last,base on the regression analysis, we propose reasonable comments and suggestions to improve ownership structure and the structure of corporate governance.

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The family holding listed companies that develops swiftly and violen…

On 04/01/2015, in Economics papers, by rain

The family holding listed companies that develops swiftly and violently in our country have been playing a significant role in the economy. The achievements of these companies are more outstanding than non-family holding listed ones, and also they will face the peak of Management rights translation from entrepreneur to successor. Until now, the researches on taking family holding listed companies as a single sample is very less and most of them use data of 2001 year, which is little, out of date, and lack of contigent. On the other hand, at present, when researching the corporate governance and performance of the listed companies, domestic scholar emphasize particularly on the relationship of the stock rights structure and performance of the company, especially of the centrilization of stock rights and company’s performance, and have not achieved a consist conclusion. So this paper take the family holding listed companies as the object, researching the relationship between corporate governance and performance of a family holding listed company.In this study, ROE and EPS are chosen as company performance variables, corporate governance is characterized by thirteen attributes, which are the cashflow rights, the control rights, the separation rate, the family strength, the proportion of managerial ownership, the size of the directorate, the proportion of family directors to total number of directors on the board, the proportion of independent directors to total number of directors on the board, the size of board of supervisors,the CEO duality, the board chairman’s pay, the independent director’s pay and all managers’ pay. Meanwhile, firm leverage and dividend average are chosen as the control variables. This study is based on a sample of 115 Chinese family holding listed companies. The results indicate that the proportion of cashflow rights, the proportion of managerial ownership, the board chairman’s pay and all managers’ pay are significantly and positively related to the company performance, the separation rate, the CEO duality and the family strength are significantly and negatively related to the company performance, the size of the directorate and the proportion of family directors have upside down U shape with the company performance, while the coefficients for the other independent variables are insignificant. Based on the empirical evidences, this paper provides some advice on improving Chinese family holding listed companies’ performance.

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Since the21st century, the high frequency appearance of domestic and…

On 27/12/2014, in Economics papers, by rain

Since the21st century, the high frequency appearance of domestic and foreignfinancial statements fraud has forced theoretical to pay attention to the research on theefficiency of corporate governance. Meanwhile, the auditing profession has restarted thestudy and improvement of the audit model. Assessing the risk of material misstatementbecome the start point and orientation of the audit work, which is introduced into theimproved audit model. Basing on the perspective of corporate governance and according tothe current corporate governance features and performance of the risk of materialmisstatement, this article mainly studies the correlation relationship between the corporategovernance features of listed company and risk of material misstatement.Features of corporate governance for listed company contain many elements.Considering the particular background of the listed companies in China, the correlation ofthe risk of material misstatement, the quantification of index and the availability of relateddata, with reference to the existing literature, this article studies the correlation relationshipbetween the corporate governance features of listed company and the materialmisstatement risk mainly basing on three essential factors: the ownership structure, thefeatures of the board of directors and the features of the board of supervisors.The special background of China’s Economic development made a profound impacton the governance structure of listed companies. Combining with China’s special economicdevelopment path, the author found that there are some issues existed in the three essentialfactors: complex ownership structure, the dominance of state-owned shares and anexcessive concentration of equity in corporate governance structure; unbalancedmanagement and operating mechanism of the board of directors; low supervisionefficiency of the board of supervisors. The failure of the governance structure of listedcompanies in China led to business risk and increased the risk of fraud, resulting a highlevel of risk of material misstatement in the accounting information of listed companies.Based on the method unifying empirical and standardize study, this thesis, which useslisted company receiving CSRC announcement for irregularities as substitution variablesof risk of material misstatement and features of corporate governance as explanatoryvariables concluding component ratio and concentration ratio of equity, the scale andindependence of board, holding the current post of chairman and general manager, the scale of the board of supervisors on the basis of controlling the company size, profitabilityand other factors, focuses on the research of constructing the Logisti regression model ofempirical analysis.The empirical results show that equity component ratio, ownership concentration,independence of the Board and the Supervisory Board size and other factors impact on therisk of material misstatement in varying degrees. It also analyzes the reason why theempirical results are not consistent with the expected assumptions. Based on the analysis ofthe results, this article put forward the corresponding proposal from the point of improvingthe efficiency of corporate governance and the quality of CPA Audit.

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An Emprical Study on VCs,Corporate Governance and Corporate Performance

On 23/12/2014, in Economics papers, by rain

With the high development of GDP, China has become the world’s second largest economy, but there are still many problems which need to be solved quickly. The new China’s leader team has come into being, more active and comprehensive reforms are coming forward to turn our economy to a new way to achieve the sustainable development end. Put a strong stick with the VC industry, establish of a multi-level capital market, so as to promote the private economy which is vital for sustainable development. The private economy, especially the small and middle sized enterprises have a large risk exposure, which leads they are difficult to finance from lending institutions or high cost loan. But VCs have the high risk-return principle, they invest in these enterprises, so the problem of money has gone. And more, VCs may provide start-ups some soft power, create some added value, which some empirical data in other countries had confirmed that the VC-backed startups operated better.To have an insight to how the VCs have an impact on the startups, this paper has constructed a mediating effect test model and taken corporate governance as the mediating variable to analyze the relationship among the VCs, corporate governance and the operating results. This paper had selected193listed companies in2009-2012in the domestic GEM as a sample and analyzed relevant data, which the results indicated the VCs’Investment had an obvious positive effect on corporate governance and operation performance, as to the mediation effect, the effect of the indicators ownership concentration and majority shareholding is not obvious, but the proportion of independent directors and equity incentives have some partial mediation effect.

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An Empirical Examination of the Correlation between Corporate Governance and Voluntary Disclosure of Information about Management Earnings Forecast

On 07/10/2014, in Economics papers, by rain

Based on decision-usefulness view,investor decision-making is closely relatedwith the company’s future business activities and financial status of predictiveinformation. With the development of capital markets and the behavior of investorsbecoming more rational, investors’ information needs of profit forecasts are growing.Broadly speaking, performance prediction information is just one kind of profitforecasts information. Performance prediction information has an important role inguiding investors to analyze the company value. Meanwhile, it can promote thesupervision of the regulatory bodies for listed companies and play a regulatory andsupervisory role in managing business activities.Therefore, performance predictioninformation attracts the academic and business circles more and more attentions.Domestic performance prediction studies have focused on the following threeaspects: the construction of the normative system analysis, performance predictionsystem for the implementation of the results of descriptive statistical analysis andbased on a different background, disclosure of performance prediction informationcontent problem. Perspective of the study is relatively simple. With the constantconstruction and improvement of the performance prediction system and disclosure ofinformation, this provides a broader perspective and the reality of institutionalconditions for our further study. Researches on the performance of listed companiesdisclosed features, the disclosure strategy of the Management performance of noticeand disclosure of motivation and influencing factors have important practical andtheoretical significance.This article is divided into five chapters: the first chapter is an introduction,which contains the main research background, the research questions, the relevantdefinition, the development process of performance prediction system, research methods, as well as major contributions. The second chapter is a literature review,summarized the researches of domestic and international factors, the impact on theperformance prediction of the voluntary disclosure, including the corporategovernance factors and firm characteristics factors. This paper studies the impact ofcorporate governance factors on the performance prediction of voluntary disclosure ofcharacteristics. Firm characteristics factors in this study are control variables. Thethird chapter is the theoretical basis and assumptions. Based on agency theory andsignal transmission theory, this paper explains the impact of corporate governancefactors on the performance forecast information disclosed. The author divides thecorporate governance factors into three aspects: the ownership structure, boardcharacteristics and managerial ownership, and then submits the relevant theoreticalassumptions. The fourth chapter is the study design, including data sources, variableselection and model. Research data is from Wind database and CSMAR database,according to the needs of research to establish the final sample. The author choosescorporate governance variables as the explanatory variable, firm characteristics andannual dummy variables for the control variables, whether voluntary disclosure, thedisclosure of the timeliness, accuracy, accuracy for the four dependent variables, thenconstructs four mathematical models. The last chapter is the empirical research. First,the author gives descriptive statistical analysis on the independent variables, controlvariables and the dependent variables. Secondly, we can verify the model. by themethod of logistic regression and multiple linear regression. Finally, this paper givesexplanations to regression results of the model and puts up with some policyrecommendations and future research prospects.Through the empirical test of the hypothesis, we draw the following conclusions.Factors of the firm characteristics play a significant impact on the voluntary disclosure willingness about the companies’ performance forecast. The beginning total assets and long-term liabilities have a significantly negative impact on disclosure willingness; apart from the board size, the other factors of corporate governance factors also havea significant effect on the voluntary disclosure willingness of the performance forecast. ownership concentration has a weak positive effect on the disclosure of performance forecast, the degree of equity balance and have a strong positive impact on it; the p roportion of managerial ownership and the total payment of executives have a strongpositive effect on it; as the board size has a strong linear relationship with constant, leading to the negative impact on voluntary disclosure of performance prediction is notsignificant.

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Corporate Governance, Cash Holdings and Firm Value

On 04/10/2014, in Management, by rain

Cash is considered as a most important part of firm’s assets. Firm’s cash holdingdecision not only reflects the firm’s operation and financial strategy, but also is closelyrelated to corporate governance situation and institutional environment. Brealey andMyers(2000) stated that the value of firm cash holdings is one of the ten unsettled puzzlesin the financial research field. The issue has aroused widespread concern of scholars inhome and abroad in recent years, whether does the corporate cash holdings have a positiveimpact or negative impact on firm value?The paper is based on reviewing systematically the relevant literature in these twodomain of corporate cash holdings the determinants of corporate cash holdings and theeconomic consequences of corporate cash holdings. Then it selects non-financial listedcompanies in Shanghai and Shenzhen Stock Exchange with complete financial data from2005to2009as samples, using the Linear Structural Equation model, empiricallyresearches the relationship of the level of corporate cash holdings and firm value, then itintroduces the corporate governance variable to study how corporate governance structurereflects the path between cash holdings and firm value.The research results show:(1)In the empirical research of the relationship of corporate cash holdings and firmvalue, the paper uses TOBIN Q and return on assets ROA as two indicators measuringfirm value to examine the association between corporate cash holdings and firm value,concludes that the firm value is negatively associated with the cash levels, the agencycosts arising from the conflicts of interests between managers and shareholders makingcorporate cash holdings pay a negative impact on firm value, which supports the agencycost theory.(2)In the empirical research of analysis of the impact of corporate governance, weselect the board size, proportion of independent directors, separation of CEO andchairman and level of managerial ownership as five indictors of corporate governancestructure, find that good corporate governance structure could significantly improve thenegative correlation between cash holdings and firm value. The more perfect the corporate governance structure, the weaker the negative correlation between cash holdings and firmvalue.(3)It’s that the five indicators the board size, proportion of independent directors,separation of CEO and chairman and level of managerial ownership can generally portraythe corporate governance structure. Besides, the empirical research concludes as follows:the board size, proportion of independent directors, separation of CEO and chairman arenegatively associated with corporate governance; the level of managerial ownership ispositively associated with corporate governance.

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A Study on the Relationship between Bank’s Loan and Corporate Governance

On 04/10/2014, in Management, by rain

The financial crisis occurred in America in2008reveals a problem that thecommercial banks all over the world ignore the awareness of risk identification andrisk control. Though the crisis doesn’t have a significant impact on commercial banksof China, it also gives us a good lesson: we must put the awareness of riskidentification and risk control a more important position. China’s commercial banksput more attention to the company’s financial indicators when signing the debtcontract with enterprises. However, more and more researches find that thecommercial banks cannot identify the earnings Management, so the financialinformation’s usefulness in the process of decision-making is harmed. Theinformation on corporate governance which cannot be manipulated by the company isthe most Basic and the most stabilized information. And the better the condition of thecorporate governance, the less information asymmetry have between banks andenterprises, and good corporate governance can reduce risk of bank operating. Socommercial banks should pay more attention on the company’s corporate governancewhen they make lending decisions. For long time, the Chinese scholars have not beinginterested in and involved the study on how the corporate governance influencing thebank loan contract, in the context of the financial crisis not far away from us, studyingthe mechanism of corporate governance influence on the bank loan contract is apractical problem for the commercial banks and the listed companies.This paper takes the companies listed in Shanghai and Shenzhen stock marketduring2007-2009as samples which meet the conditions,to find out the relationshipbetween the corporate governance and the availability of credit financing. Thecorporate governance is complex mechanism, we cannot only use one or some simplevariables to replace the condition of the corporate governance. In this paper, westructure a comprehensive index GI through the method called PCA to measure thecondition of the corporate governance. And then we use this index to study therelationship between the corporate governance and the loan size and the points ofcrediting financing.The results of the study show us that, the condition of the corporate governanceand the ability of getting the bank loaning have a positive correlation. It reflects in thefollowing aspects: firstly, the better of the condition of corporate governance, thelarger size the companies get bank loans; secondly, the better of the condition of corporate governance, the higher comprehensive point of loan. This paper not onlyriches the theoretical content on the study about bank loaning, but also reveals that thecondition of corporate governance is an important factor affecting financing. Finally,this paper has important practical significance, because it provides new way to solvethe financing constrains.