Listed corporate governance structure defects and false financial reporting

Listed corporate governance structure defects and falsefinancial reportingJohn Davis1.A structural deficienciesCorporate governance structure defects are false financial reports of listed companies have the root causes in recent years, with Enron, WorldCom and other blue-chip companies the shattered myths, false financial reports of listed companies issue has become the focus of attention of the public. As for listed companies preparing fraudulent financial reporting reasons, it was felt that the interests of managers chase is the fundamental and this view is unrealistic. It can be said that the emergence of false financial reports from the false self-motivation, but the fundamental reason is the system. As the accounting fraud managers often shows that the people of the economy, the economy of the mainly from the self-motivation and self-economic motives were also primarily due to the unreasonable structure of the system, because certain economic always act in a certain framework of a system of rational behavior. The reason why people in the framework of the different systems will produce different acts, not because people changed, but because they have a system in which the environment has changed, a different system structure, have a different incentive mechanism. Therefore, a different system will be different arrangements for the conduct of accounting fraud in the criticism, behind these acts should analyze the deep-seated causes. Of course, this should be a cause of the system level. Listed companies of the most important internal arrangement is the corporate governance structure, corporate governance structure is the cornerstone of the modern enterprise system and the core. The so-called corporate governance structure, this means the establishment of the system based on the theory of a group of association and the corresponding standard corporate owner, unencumbered, manager of mutual rights, obligations, interestsAn institutional arrangement. It is all of the property rights of the empowerment formed on the basis of reasonable property rights system arrangement is effective corporate governance structure necessary precondition andfoundation. The corporate governance structure is the essence of resolving ownership and control arising from the agency problem, the structure of corporate governance is the core of handling between shareholders, as well as representatives of the shareholders and clients as an agent of the relationship between the manager . Sound corporate governance structure has two major functions of incentive and restraint, the so-called stimulants, and is based on the principal-agent relationship based on the owners and operators of such rights and responsibilities in the General Assembly designed to ensure that the company's shareholders, board of directors, board of supervisors and the manager of Oxfam their level, the operator can be given full operational autonomy, but also protect the rights of owners and make full use of the overall function and the function is bound instructed all right assets in mutual separation of state , to maintain effective restraint and supervision so that the rights of all assets mastered and used strictly as possible by appropriate asset liability constraints, defeated Germany acts to prevent the widespread occurrence. Of course, these two functions are inseparable.The false financial reports should be generated by the two indispensable part of First speculation books, the United States fraudulent financial reporting committee. Be called "fraudulent financial reporting '; Second, buying registered accountants or accounting firms to change purchasing accounting principles Typically, speculation books listed company, registered accountants to follow minimum standards and professional practice caution can check out, the listed companies in order to make false financial reports Notice must buy registered accountants to make it an unqualified opinion issued by the audit reports. Clearly, these two subjects are not with the corporate governance structure is directly related to standardize because under the new "Accounting Law," provides that the people responsible for the unit's accounting practices and accounting information responsible for the authenticity and integrity, while head of listed companies is the chairman of the board and chairman of the board of directors responsible for the turn to the shareholder meeting, the general manager responsible to the Board of Directors, subject to the direct supervision of the chairman, if the corporate management structure norms, "two ofthe three-tier" system of sound financial management effective in the country's major shareholders and managers are considered to be internal. investor-friendly acts will be inspired, and undercut, to the detriment of investors behavior will be an effective restraint and supervision, the interests of medium and small investors good protection will be subject to the above two areas, all avoidable, no false financial report on the survival of space. problem lies in the shareholder structure of listed companies in China unreasonable and seriously affect the management structure of China's listed companies with the management efficiency, resulting in corporate governance structural defects, incentive and restraint function weakening, it is false to the inherent false needs and opportunities, forgery behaviors will not promptly, effectively contained and cooking the books wantonly.2.Perfect Board systemClear stake in the Board of the transfer of responsibilities through the introduction of outside directors, controlling shareholders to change the board complete control of the situation and avoid the appointment of directors own their own manager and general manager in particular the chairman of the integration of the two occurred, and give full play to various special committees in particular the role of the Board, the Board should, based on the general meeting of shareholders and all shareholders and responsible attitude, earnestly implement the "Company Law" provisions of the terms of reference, to properly perform the duties of the owner of financial management, the strengthening of internal restraint and supervision to prevent managers set decision-making power, the Executive, and supervise, thus curbing the emergence of false financial reports.Establish and improve the system of independent directors set up an independent directors, the board can change the one hand, the internal structure, improving the overall quality of the board, increasing the openness and democratic decision-making, controlling shareholder constraints, on the other hand can supervise managers, to reduce internal control of independent directors to take a truly objective and fair stance on the protection of the company to protect shareholders, especially the interests of small and medium shareholders, regulateindependent director system, "step up training so that the independent directors of both possess a certain amount of accounting knowledge, and have stronger Comprehensive judgment, ability to innovate and macro-management strategy analysis. independent directors to work actively and property concern, it should allow access to its obligations and responsibilities under the corresponding reasonable remuneration, but the decision to prevent the return of shareholders fell control or managers.3. Strengthen manager incentiveMajor reflected in revenue system and organizational system. On the revenue system, the annual salary system does not exist the manager's effective incentive and restraint, on the contrary-induced performance fictional manager to obtain improper compensation. For company managers are the efforts made their due reward, inevitably restricted the company through stock options, and other ways to allow managers to participate in the remaining allocation to play manager's enthusiasm and ability to innovate, but also to prevent the manager "internal transactions act! "that is, when the company's long-term development problems, those who know the inside story of a manager in the near future through the company cooking the books to create the illusion of prosperity, the company announced in early operating losses before selling their stock out." the manager of the re-organization system for the improvement of corporate governance is very important, the following areas should strengthen the organization system manager rescheduling:! general manager will be bound directly into the board of directors, supervision; "break with traditional administrative path , the market standard choice manager, it is necessary to pay more attention to personal management can speed up the development manager market, creating a large enough group of managers, increased competitive pressures, forcing managers to work hard, thereby external forces to restrain manager deviated from the company to maximize value, it is especially important to prevent them through the preparation of false financial reports to deceive investors, strengthen the manager's legally binding.4.Perfect system of the board of supervisorsIf the board of supervisors to faithfully perform their duties, can be effectively bound by the directors and managers; false financial reports on a "firewall" role, according to the "Company Law" provides that the board of supervisors is the main duty of the company's financial inspection of directorsManagers exercise their functions and powers and violated the laws, regulations or corporate conduct supervision of the Constitution, when the directors and managers of damage to the interests of the company, require directors and managers to be rectified. The Board of Supervisors should set reasonable and clear to members of duties, powers and responsibilities of Prevent an internal control of the board of supervisors through training and study to continuously upgrade the quality of the business, thereby improving the monitoring capacity of the board of supervisors. Of course, the work of the board of supervisors should be a regular, the general meeting of shareholders on the board of supervisors should also strengthen inspection and supervision.5.Full play to the supervisory role of finance directorThe two separated in the right conditions, because owners and operators are not entirely in the interests of consistency, we need to set up representative of the interests of the owner of the Financial Controller manager for financial supervision. Finance Director through participation in the company's financial planning, regulation and controlThe implementation of the financial plan, and significant funds for the use of the regulation signed, the veracity of the financial report, a review of reliability, such as the exercise of their powers, to constrain the manager's behavior, an internal control system exhibition, which regulate the company's financial activities addressing operational decision-making errors, and financial balance of chaos and false financial reporting issues.6.Strengthen external oversightThe securities regulatory departments, registered accountants dealing with the governance structure of listed companies Reconstruction situation better guidance and supervision, increase the intensity of punishment prompted companyshareholders meeting, board of directors, board of supervisors and senior managers of internal controls and checks and balances between the function of filling The play, to prevent false and arbitrary change of firms to purchase accounting principles. At the same time, improve the relevant laws, regulations, laws, laws must be strictly enforced, and that increase the intensity of punishment are false, so as to enhance the fabrication costs and make false to lose more than they gain, a false financial report can be effective containment.。