Earnings Management Of Listed Companies And Accounting Standards Setting

Earnings management is an act in which the enterprise's management deliberately adopts a multiplicity of methods to achieve anticipated report earnings on the precondition of compliance with accounting standards. Earnings management is an important subject in the studies of accounting theories. Previous studies have largely been limited to "what" (concept), "why" (motive) and "how" (methodology). By taking into account the latest developments of earnings management of listed companies in China and beyond, this paper swifts its attention to the restrictive factors of earnings management, and takes the key factors that restrict earnings management - accounting standards as the point of entry, and, on the basis of building a theoretical framework for earnings management, elaborates on the relationship between the earnings management and accounting standards of listed companies in a systematic manner for the first time. On one hand, accounting standards vigorously restricts the occurrence of earnings management, but on the other hand, for one reason or another, accounting standards may also become a tool for corporate earnings management. Therefore, we may find that the result of the implementation of such standards is not always desirable, and that in some cases, it may even entirely betray the original intensions of the setting of the standards. This issue deserves some serious thought of the setters of accounting standards. On the basis of an in-depth theoretical elucidation of and empirical analysis of the earnings management of the listed companies and the setting of accounting standards, this paper puts forwards some policy suggestion for China's setting of standards, which are helpful for improving China's accounting standards. Following is a description of the major contents of this paper:Chapter 1: Introduction. This chapter describes the motive for selecting this research topic, research methodology, structural arrangement and major contribution.Chapter 2: Theories Related to Earnings Management. On the basis of expounding the basic theories relating to the concept, formative cause, restrictivefactor, advantages and disadvantages, this paper points out that accounting standards have a dual effect on the occurrence of earnings management, and performs a further study on this basis.Chapter 3: Overview of Literature on Earnings Management. This chapter provides a review of domestic and overseas research literature on points of interest for setters of accounting standards, including the motive, methodology, market response and restrictive factors, and derives the research significance of this paper from the evolution of earnings management studies.Chapter 4: Theoretical Studies of the Earnings Management of Listing Companies and the Setting of Accounting Standards. This chapter elaborates on the relationship between earnings management and the setting of accounting standards from two aspects. On one hand, the setting and development of accounting standards play a precautionary and restricting role for earnings management, but on the other hand, as a result of economic consequence, limitation of the technology and the model of accounting standards setting, accounting standards cannot eliminate earnings management, and may even cause earning management.Chapter 5: Empirical Studies of Earnings Management of Listed Companies and the Setting of Accounting Standards. This chapter, through case studies and statistical analysis of the Materiality principle, assets depreciation reserves, and non-recurring profit and loss, corroborates the contents of theoretical studies and derives preliminary conclusions.Chapter 6: Policy Suggestions for China's Accounting Standards Setting. This chapter explores the possible solutions to China's Setting of accounting standards in terms of the earnings management of listed companies.