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Improve the corporate governance structure to improve the quality of accounting information

Author: LuoPing From: www.yourpaper.net Posted: 2009-07-02 21:09:34 Read:
Abstract: Accounting information helps to reduce the uncertainty faced by investors in the decision-making process, and to promote the benefits or reduce the flow of social resources. Loopholes and shortcomings of the corporate governance of listed companies is an important reason to affect the quality of accounting information, improve corporate governance and improve the quality of accounting information is closely related, combined with the reality of our country, and to draw on the lessons learned abroad, strengthening internal and external monitoring, and constantly improve the corporate governance structure improve the quality of accounting information.
Keywords: corporate governance; quality of accounting information; defect


According to statistics, China's securities market was established May 31, 2003, a total of 45 listed companies be punished because of the corrupt practices of the financial report, accounting for about 4% of the total number of listed companies. After a series of listed companies in financial fraud and accounting scandals, the entire accounting and auditing profession began to rethink the quality characteristics of accounting information, and focus instead on the reliability, relevance of accounting information. Them to achieve high-quality financial reporting, external conditions, it is necessary to ensure the high quality of the accounting standards. Financial fraud in our country has become the capital market tumor disease, the causes of a lot of literature are discussed, including economies in transition, inadequate laws and regulations, and moral level landslide practitioners, stakeholders driven by profit, fraud, etc., which of course, is not to be ignored, but cause real financial fraud of listed companies in China is rooted in corporate governance defects, that imperfect corporate governance is an important source of all the problems, defective corporate governance can not guarantee the high quality of accounting information. Quality of accounting information disclosure to play an important role in the corporate governance structure of the formation and operation of the process, help to promote and improve the corporate governance structure; Similarly, an effective corporate governance structure also contribute to the improvement of the quality of accounting information of listed companies.

Corporate governance connotation

To study corporate governance, first of all it must be clear what is corporate governance? Corporate governance is a multi-angle multi-level concept, it is difficult to express in simple terms, the original English text of "corporate governance" which the meaning of the word "corporate" groups, legal organizations, another meaning is common , all; "governance" of the meaning of the word ruling, governing, disposable, management, another means ruled Management Act, but the corporate governance view of the emergence and development of this problem can be narrow and Generalized two aspects to understand. Corporate governance in the narrow sense, refers to the owner of the main shareholders of the operators of a checks and balances mechanism. Arrangements through a system of rights and responsibilities between the owners and operators, to reasonably configure. Broad corporate governance is not limited to the checks and balances of the shareholders of the operators, but rather involves a wide range of stakeholders, including shareholders, creditors, suppliers, employees, government and community a stake in the Group and the Company. Tricker believes that corporate governance is present in the governance body and its members, managers, formal and informal links between other stakeholders, auditors and policy makers, network and structure. And he thinks that the two key factors of corporate governance is to monitor performance and ensure that managers of managers the responsibility of the main shareholders and other stakeholders. Of Phlip L.Cochran and Steven L.Wartick (1988), believes that corporate governance is the specific interaction between senior management, shareholders, the Board of Directors and other stakeholders of the company. Lin Yifu, pointed out that the so-called corporate governance structure, a set of arrangements for the supervision and control of the owner of the business management and performance of an enterprise. They usually people are concerned about the corporate governance structure, actually means the direct control of the company or the internal governance structure. Weiying that the corporate governance structure of such a mechanism to solve AG internal agency problems, which specifies the relationship between the owners of the different elements of the internal, especially through the explicit and implicit contracts residual claim and control rights allocation, thus affecting the relationship between entrepreneurs and capitalists.

3 of the corporate governance structure of the status quo

3.1 shareholding structure is irrational, the state-owned shares an "dominant"
Irrational shareholding structure of listed companies in China, due to the dominance of the phenomenon is quite common. Mainly in three aspects: 1, too many types of stock issued A shares, B shares and H shares of the market is split, each have a different market price, not the free flow of state-owned shares and legal person shares, can not follow the same shares with Lee principle, with the same price of shares of the same rights and the same shares. National proportion of shares is too large, not yet traded up to 40% the proportion of state-owned shares, some listed companies will even up to 80%, about 15% of the proportion of legal person shares the same time, the proportion of institutional investors, such as the Securities in Shenzhen Exchange issued the largest shareholder in the share capital of the largest 12 companies absolute Holdings to 11, five of the largest shareholders in the share price more than 70%, for these companies, as long as the major shareholders agreed to a proposal to vote or objection, it can be the adoption of the general meeting of shareholders, minority shareholders is difficult to influence the company's decision-making.
3.2 Board of independence is not enough
External independent directors of the Board rarely, the vast majority of the board of directors representative of the controlling shareholder, and the vast majority of corporate managers. Virtual level, as well as some of the company's chairman of the board and even do not get paid the post of chairman and general manager-in-one. TIAN Zhi-long survey of 100 AG, 65% of the chairman is also the CEO system, the proportion of the board of managers of 46.18%; Second, the appointment of board members violated the basic principles of corporate governance, they are not accounted for 40.9% of the company being investigated by the shareholders' meeting elected but nominated by the government departments or higher authorities, this situation exists. In this way, it is easy to produce insider control.
3.3 Internal control problem is serious
Information asymmetries and contract is incomplete, so unable to lower the cost of coordination contract parties target in the separation of ownership and enterprise internal control, internal control problems will be generated. Internal become the de facto owner of the company, which in turn control the Board of Directors of the Company, and even the selection of directors to decide the appointment and removal of directors. In this case, the controlling shareholder or a few key people will be able to control the company's financial reporting. To the controlling shareholder or management of the interests of the authorities, it is possible to manage earnings and even manipulation of financial reports, and providing false information to mislead users of external information.
3.4 Board of Supervisors useless, its oversight responsibilities place
Corporate enterprises in China is a single-layer board of directors system, parallel with the Board and the Board of Supervisors only a part of the supervisory authority, but not control and strategic decision-making power, not entitled to the appointment and removal of directors or senior executives, not entitled to participate in and vetoed the Board and manager layer of decision-making; same time as China's "Company Law" and other laws and regulations in the specification of the structure of corporate governance, shareholder value oriented, the emphasis on the role of the Board of Directors, to the neglect of the status of the board of supervisors, the Board of Supervisors is really just a control by the Board of Directors deliberative bodies; another part of the company due to the Board of Supervisors and largest shareholder is closely related to the environment of the Board of Supervisors to the lack of supervisory skills and perform their duties, resulting in the Board of Supervisors in the operation of mere formality.
In this case, the controlling shareholder or a few key people will be able to control the company's financial reporting. It is possible to manage earnings to the controlling shareholder or the interests of the management authorities, and even manipulation of financial reports, providing false accounting information to mislead users of external information.
3.5 is not perfect incentive and restraint mechanisms
Establishing incentives, our company has made a lot of exploring. But generally speaking, our senior managers incentives are far from perfect. The one hand, the directors of listed companies, executive compensation structure is relatively simple, on the other hand, incentives comparative static strength is weak, personal income and corporate performance specification link is not established. At the same time, the incentives is relatively simple, it is difficult to fully mobilize the enthusiasm and creativity of the operators.
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