Study On Effects Of CFO Career Concern On Earnings Management Behaviors

In the1980s, our country begins to study the internal control system. But in recentyears internal control committee is formed and a set of guidlines and one basic standardare issued, the start is a little later. As far as listed firms are concerned, internal controlsystem and corporate governance conditions are falling behind.Since the standards were issued in1994and2001, In december2006, our countryhas issued a basic accounting standard and38special accounting standards not longagain, but following it some annual reports and explanatories revised accountingstandards, it makes lots of accounting treatments exist imperfect and shortages.Withaccounting standards are geared to international report standards, many accountingtreatments need improving, in addition, some corporations lies in muddle basically.These conditions result in listed firms making unscrupulous windows dressing for theiraims.CFO is the indispensable role among financial market, product market andcorporation value management, the resources value manager of corporation value chainmanagement. Standing between capital management and corporate management, CFO isimportant strategy maker, financial executor and managemnet supervisor. Corporategovernance focus on CEO, independent director and supervisory board recently,disregards special state and function of CFO, especially CFO system. In recent year it ismore and more important, change phenomenon often occurs. Business ethics and socialresponsibility of CFO are more outstanding, obligations and liabilities are not distinct.For corporation’s and his goals CFO uses earnings management with his financial right.To study on CFO earnings management behaviors and career concern has very importanttheory value and realistic significance to perfect corporate governance and restraininternal control and windows dressing problems, is convinent to better CFO system andbenign development, and it is very important to help accounting standards quickly togear to the international financial report standars.So firstly the dissertation expounds corporate governance, earnings managementand career concern relative research conditions, discusses the market estination of CFOtalent with games theory and signal model theory, analyzes the relationship of CFO andearnings management and the background of CFO system. Secondly, it analyzes the effect of CFO career concern on earnings management behaviors, and brings up sometheoretic hypothesis. Thirdly, it applies empirical test with regression analysis throughinvestigation data of listed firms, empirical results supports the dissertation hypothesisrobustly and obtains researching conclusions, i.e, In contrast to elder CFO, young CFOhas bigger non-incentive factors engage in accruals and real earnings managementactivities, he prefers to select management accruals. While decision making andchoosing accounting policies, CFO of career concern is willing to select long-termtrend. Non-contract and recessive career concern incentive are important decisivefactors of accruals earnings management and real activities earnings management. Thereare significant negative correlation between young CFOcareer concern and abnormaldiscretionary accruals and significant positive correlation to abnormal productive cost.There is significant positive correlation between young CFOcareer concern anddiscretionary accruals. Auditing quality level is significant positive correlation withdiscretionary accruals and abnormal discretionary expenses, reverse to abnormalproductive cost. Accounting standards and internal control rules are positive correlationwith discretionary accruals and abnormal discretionary productive cost, contrast toabnormal discretionary expenses. Finally pointed to the conclusions, the paper providessome relative solutions and prospects to later research.