The Motivations And Manners Research Of Earnings Management About Listed Company In China

The phenomena of earnings management are universal corporation behaviors, especially in China listed companies. In this dissertation we define earnings management as one kind of management behavior based upon some definite motivations that some definite main body adjust corporation earnings by some manners without prejudice to correlated laws, rules, systems, accounting guide line and criterions.The springboard or motivations of earnings management mainly consist of motivation of capital market, motivation of contract and motivation of political cost. Motivation of capital market stand out markedly in China listed companies. In other words, the main motivation of earnings management in China listed companies is motivation of capital market or motivation of financing. The manners used by earnings management to achieve these targets behave many kinds, These manners include that accrual adjustion and withdrawings and reversings of assets depreciation reserves under accounting guide line permission, and include real transaction such as relating transaction, assets regrouping, debts regrouping, etc. In China the main manners are assets depreciation reserve, relating transaction, assets regrouping, debts regrouping, etc.The distribution of earnings after management is regarded as one of the approaches to the study on the phenomena of earnings management in listed companies, and then it is used to study the earnings management behaviors of those listed companies which have issued A shares on China stock market. It was found that the ROE shall be kept slightly higher than that in the intervals 0, 6% and 10% to avoid loss or to acquire the rights of Right Issue and Seasoned Equity Offerings (SEO). In other words, there exist phenomena of tiny profit, protecting of rights of Right Issue and SEO. The distribution of total ROA is analyzed and the systematic difference between the distributions of ROA and ROE is found, which means that the listed companies are possible to rig the net equity so as to reach the passable level of Right Issue, thus providing the evidence to prove that the earnings management behavior of listed companies changes with the policy evolution of both Right Issue and SEO.The main research scope of this dissertation consists of motivation and manners of earnings management. We analyse the status of development and characteristics of China listed companies firstly. And which affect the phenomena of earnings management in listed companies. In addition, we analyse the affections of enterprise accounting guide line to earnings management. The main affections consist of fair value measure attribute and guide line of assets depreciation reserve. In this dissertation, we believe that withdrawings and reversings of assets depreciation reserves belong to normal operation profit deduction items. Based upon Jones model, modified Jones model and extended Jones model, we bring forward an improved extended Jones model. In this model, we improve the measure of total accruals by eliminate assets depreciation reserves from Earnings Before Extraordinary Items ( EBXI ). The empirical research results show that the effect of the improved extended Jones model is more statistical remarkable than that of others to detect earnings management.Then, we use this model to carry through the empirical research about motivation and manners of earnings management. In motivation research we found that the effect of the improved extended Jones model is more statistical remarkable than that of others to detect earnings management. And in manners research we found that the effect of assets depreciation reserves to earnings management is marked but not great, while the effect of relating transaction to earnings management is marked and great.