Abstract:In this paper, using the contract theory to analyze the effect of the largest shareholders trait in equity influence, influence and control other of government power on the possibility of listed companies’ loss reversal. This research found that the higher the proportion of the first shareholder is, the greater the possibility of loss reversal in the short term; But the loss may occur in the second year and the third year. The sample of group of the first largest shareholder is state-owned identity loss reversal in the short term. It is obviously higher than that of the first major shareholders’ other status; the greater the degree of separation two rights of the first major shareholder in the short term, the less likely the listed companies’ loss reversal. This paper makes a study of the problem of loss reversal from the first big shareholders perspective, in order to enrich in the literature of corporate governance and loss reversal formation mechanism, and it is useful for enterprises to prevent financial crisis and improve the financial performance and maintain the sustainable business performance.