Research On The Supervision Channel Of Media Report Restricting Corporate Earnings Management

As an important research topic in the field of corporate finance and corporate governance,earnings management has been the concern of academics and practitioners However,extant studies show that corporate governance does not only rely on corporate internal system,it is also influenced by both the internal and external mechanisms.For studying how the media,which is an external governance mechanism,constraint the corporate earnings management,by constructing a theoretical framework an in-depth mechanism of how it works is analyzed to explore the possible influence paths through which the media can impact corporate earnings management.This study provides a new theoretical perspective for research how the media as an external governance mechanism works in corporate governance.Considering the corporate governance issues in the social background,it is believed that corporate governance is not only limited to the corporate internal supervision and control,but also include the social supervision,especially the supervision from the media.As China's legal system is not intact,government supervision is weak,and corporate governance mechanism is not yet fully established,other alternative mechanism is needed as a supplement.This study helps to fully understand the important role of media as the external mechanism constraining the corporate earnings management behavior,and also provide meaningful reference for other developing countries.To guarantee the reliability of accounting records and authenticity of accounting information,according to the accounting law the trinity of internal supervision,social supervision and government supervision build up the accounting supervision.In this dissertation,through theoretical analysis it is concluded that the media as an external governance mechanism,can have an influence on the agents of accounting supervision by strengthening their supervision functions,thereby the media can better play its role in corporate governance.The mediation and moderation models studying on the influence of media on corporate earnings management are constructed based on 4002327 reports form 5132 medias and the financial data of China's a-share listed companies in the period between 2003 and 2014.The empirical results prove that accounting supervision play roles during the process of media coverage constraining corporate earnings management behaviors.This dissertation consists of seven chapters:the first chapter mainly introduces the research background and research significance,defines the main concept,and describes the technical routs.The second chapter mainly illustrates theories about earning management and media coverage.The third chapter builds up the theory framework of how the media constraints corporate earnings management,and analyzes the role accounting supervision plays.In the fourth chapter the impact of media coverage on corporate earnings management behavior through auditor path is investigated,and how different categories of media reports work on auditors are researched.The fifth chapter mainly analyzes the influence of media reports on independent directors,and proves that media can cause the independent directors better to do their works in supervising the corporate earning management behaviors.The sixth chapter includes the government administrative regulatory to examine how it restrain the corporate earing management under the influence of media coverage.In chapter seven the conclusions and contributions are elaborated and the future research is discussed.In this dissertation,the main research results are as follows:(1)The media coverage can effectively cause the external auditors,as the agent of social supervision,better to do their works in supervising the corporate earning management behaviors.Studies find that media coverage can effectively constraint corporate earning management behavior.The spotlight effect of negative media coverage increases the audit risk,and in order to reduce the litigation risks and reputation losses,auditors increase their works to improve the audit quality,eventually to restrain earning management behavior.In a transition economy,the media plays a role of corporate governance through its influence on auditors.Therefore,the authority,profession and influence power of media reports should be strengthened.With the media supervision as the spear and the auditor as the shield the media coverage can help to improve the corporate governance and guarantee the accounting information quality to protect the investors.(2)The media coverage can effectively cause the government administration supervision department,as the agent of national supervision,better to do their works in supervising the corporate earning management behaviors.Studies find that media coverage can trigger the regulation by government to inhibit corporate earning management behaviors.Further studies find that different sources of media reports have different effects.Negative reports form the authoritative media can significantly improve the extent and probability of regulatory penalties.The publicity from the government administration supervision department under the media reports can make up the inner defects of administrative regulation,such as information asymmetry,make the media an important role in corporate governance,and cause the companies callback the earnings.Therefore,the media governance should be strengthened to lead the government administration to detect and discover the companies with problems,through which the government can play a deterrent effect.(3)The media coverage can effectively cause the independent directors,as the agent of inner supervision,better to do their works in supervising the corporate earning management behaviors.Studies find that media coverage can ignite the reputation mechanism by making incentives to the independent directors who are in pursuit of "experts" reputation,through which the media can effectively constraint corporate earning management behavior.Therefore,the media governance should be strengthened by putting reputation constrain on independent directors,by which the independent directors are transformed from "vase" to "woodpecker" to improve the corporate governance and guarantee the accounting information quality to protect the investors.The media governance is an effective supplement of the corporate governance and legal system,which are not perfect for now.