| Summary: | 碩士 === 淡江大學 === 會計學系碩士班 === 99 === China is an emerging market in which people are more concerned for the growth and accounting qualities to make investing decisions. China’s identical political economic environment and the planned economy have resulted in public sector firms with strong political connections and split share structure of SOEs(state-owned enterprises). Consequently, the unique equity structures of SOEs brought up problems such as poor corporate governance and accounting qualities. However, the government of China has acknowledged the severe problems and has managed to reform the split-share structure in year 2005 as a way to reduce the political connections, improve public sector performance as well as improve the accounting qualities of the SOEs. The study investigates the relationship between political connections and earnings qualities by examining the data of China A-share listed firms. By employing earnings persistence, estimation error, earnings management and conservatism proxies, this study is able to investigate the impact which the split-share structure has imposed on the political connections and earnings qualities in the post reforming period. The result shows that the political connections of listed firms leads to lower earnings persistence and earnings conservatism, and the estimation error level and earnings management behavior lowers down after the reform. These evidences suggest that political connection is significantly and negatively related to earnings qualities. In addition, the empirical results indicate that split-share structure reform has effects on mitigating the low accounting transparency that is caused by political connections of firms.
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