The Impact Of Investors’ Behavior On Earning Management In The Business Cycle

After reform and opening-up China’s economic development approach to the world economic gradually. Fluctuations in the business cycle exist objectively due to the essential characteristics of market economic, then the overall macroeconomic factors such as money supply, interest rate, industry level, government control policies and so on attendant. Over the past decade, it has a positive or negative driving force for our listed companies to the change of business environment, capital cost, stock market volatility mainly reflected in corporate governance mechanisms and operation demand motive. This driving force not only has positive impact on business management and marketing mode, but also has negative impact mainly because of the crowding out effect from massive government inefficient investment, excessively loose credit policy and the effort of discipline. Firstly, it made companies meet the demand for production and management and long-run development by earning management to the positive or negative change of business environment, capital cost and information environment. Secondly, under the influence of market economy status and business environment, different investors will take different measures, then it will trigger or inhibit the enterprises’ aggressive earning management. On the one hand, macroeconomic factors affect the main micro enterprises’ production activities that depend on the survival of the business environment, thus making the company operating results, profit growth and the company’s market value is affected, and change the company’s fundamentals directly affect the company’s earnings management. On the other hand, under the influence of the different behavior of investors, the company’s governance and management decision-making will be different effects occur simultaneously at different stages of the business cycle changes in investor behavior and the degree of earnings management motivation will change accordingly.Therefore, this article from a macroeconomic perspective, analyze spillover effects of the business cycle of earnings management, investor behavior and study the relationship between different earnings management, and explore the impact of investor behavior at different stages of business cycles on earnings management, thus combining different economic earnings management cycle stages established under restraint mechanisms conducive to market stability and corporate governance, with the capital resources to improve social resources.There are eight chapters in the paper:The first chapter is an introduction, it describes the research background, purpose and meaning, and to sort out the current focus of many scholars in the business cycle, investor behavior and earnings management and other aspects of doing qualitative research. The second chapter is the theoretical basis, it elaborated on the business cycle, the theory of behavioral finance, investor behavior, earnings management, etc. The third chapter examines the spillover effects of the business cycle on earnings management, and analyzes the impact of business cycles on the mechanism of action of different investors earnings management behavior and the behavior of different types of investors will have earnings management. The fourth chapter analyzes the influence of the controlling shareholder of the transport behavior of earnings management and the introduction of the effects of different stages of the business cycle on this basis, examines the relationship between the controlling shareholder of the business cycle and Earnings Management. The fifth chapter analyzes and examines the relationship between institutional investors holding the business cycle and Earnings Management. The sixth chapter analyzes and examines the relationship between the business cycle investor trading behavior and Earnings Management. The seven chapter of the empirical test based on established on the basis of earnings management and restraint mechanisms at different stages of the business cycle. The eight chapter is conclusions and prospects for this article. This paper obtain several conclusions as follows:(1)Business cycles have spillover effects on earnings management. Listed companies operating environment will change under the influence of the business cycle and market conditions, thus affecting the company’s fundamentals, thus making the change with Earnings motivation, and ultimately affect the company’s earnings management market, and earnings management in economic contraction period is greater than the economic expansion.(2)Affect the interests of the controlling shareholder of transport behavior of earnings management is significantly positive, the interests of the controlling shareholder of the greater frequency and extent of delivery, the greater the degree of earnings management. Combined with the business cycle further found that, compared to the economic contraction, the interests of the controlling shareholder of transport behavior in a more severe economic expansion and increase the degree of earnings management.(3)Influence the behavior of institutional investors holding on earnings management is significantly negative. And economic expansion, the role of institutional investors holding earnings management behavior suppression is weakened; systolic business cycle when economic behavior of institutional investors, while the impact of earnings management processes with negative regulatory role, that the economy is in contraction, to institutional investors ownership behavioral inhibition earnings management has promoted.(4)Investors’ behavior significantly affect earnings management, the more active investor trading behavior, the smaller the degree of earnings management. Under the influence of fluctuations in the business cycle, investment sentiment in turn affects the degree of volatility trading behavior of investors impact of earnings management. Economic expansion, is directly related to reduced investor trading behavior and earnings management, is the operator, major shareholders and the market impact of earnings management by monitoring the environment to a greater extent; and economic contraction, the impact on the trading behavior of investors earnings management process plays a negative regulatory role, that when the economy is in contraction, the more active investor trading behavior, the greater the degree of earnings management.In a word, depth analysis of the impact of investor behavior change at different stages of the business cycle on earnings management, based on the macro business cycle explore hidden influence investor behavior on earnings management through internal mechanisms article. Found in the business cycle impact, changes in investor behavior and earnings management of listed companies influence the process. Combined effects of the business cycle fluctuations features to investor behavior as the starting point for effective supervision market, protecting the interests of small investors, to reduce the degree of earnings management to guide the flow of high asset efficiency industries and enterprises, improve the efficiency of social resources and maintain the stable operation of the capital market-related constraints proposed mechanism.