Earnings Quality and the Agency Costs of Controlling Shareholder

摘要

High quality accounting information can help mitigate the information asymmetry of the Principal-Agent problem. So, it has a great effect on the corporate governance. Using instrumental variables and panel data model, this paper analyses how the earnings quality, measured by accrual quality, affects the agency costs of controlling shareholder empirically. It reveals that earnings quality affects the agency costs of controlling shareholder significantly; companies with higher earnings quality have lower agency costs of controlling shareholder, and the agency costs decreases with the improvement of earnings quality. The results provide new evidence on the corporate governance effect of accounting information.