The Relationship between Political Connection and Quality of Financial Statement-Study by Family Firms from China

• Main Authors: Yuan-Jie Jian, 簡媛婕
• Other Authors: Yan-Jie Yang
• Format: Others
• Language: zh-TW
• Published: 2017
• Online Access: http://ndltd.ncl.edu.tw/handle/g4zw4m

碩士 === 元智大學 === 財務金融暨會計碩士班(會計學程) === 105 === This paper focuses on the relationship between political connection and quality of financial statement. Due to the fact that the quality of earnings is difficult to measure directly, our study apply discretionary accruals as a proxy variable of the degree of earnings management to examine the quality of financial statement by using the deterministic accruals Kothari, Leone and Walsey (2005).The data of the research is gathered from listed companies of A shares in Shanghai and Shenzhen Stock exchange during 2006 to 2015 about ten years. Our study found that when the executives with political connection in family firm, then family firm will reduces earnings management or tends to manage downwards, otherwise the family firm will do the behavior of earnings management when the family firm without political connections. The reason that when the executives have political background is more familiar with the government's governance objectives or related laws and regulations, so companies do not need through the earnings management to achieve certain government requirements, to indirectly infer the quality of its financial reports higher than family firm without political connections. Further divideds the types of political connection into three kinds, this research has demonstrated political association of committee member(PC_CPC) tends to expose higher quality financial information, less earnings management to represent that family firm with political connections will reduces earnings management than family firm without political connections. Other categories other(PC_ELSE) the political background of the executives personnel have a wealth of financial experience and financing contacts, may be for the family business to achieve the degree of protection to do earnings management upward adjustment means that family firm will do earnings management than family firm without political connections. When family firm with political connections is type of govoment officer (PC_GOV) means that family firm don't have motivation to do earnings management.