A Study On Earnings Management Of Chinese Listed Companies

Listed companies are the main force of the security market and the important support of the domestic economy. According to the latest statistics, there are 1,232 listed companies which own 4720.418 billion market value in China. Because of their important status in the relevant industries, their acts will bring great effect to the whole industry and the economy of our country. However, with the rapid development of the listed companies, more and more problems existing in Chinese listed companies have been emerged. From the previous Qiongmingyuan Case to the current Yingguangxia event as well as Macat> Mailyard, Dongfang-china.com, many problems have been exposed and the circumstances of Chinese security market becomes more and more complicated and confusing. Permeating into the phenomena we can find that these problems have the same characteristic that is earnings falsity. Reviewing the annals in the past years, we can also find that the earnings management is in common in Chinese listed companies. The "10 percent phenomenon", "zero interval phenomenon" and "6 percent phenomenon" have become an unique scenery in Chinese security market. The annual "The Examining Proclamation on the Quality of Accounting Information" promulgated by The Treasury Department is just a testimonial of margin falsity. "The Monthly Survey on the Managers of Listed Companies" promulgated in 1999 and the research on the good faith done by the National Accounting College further confirmed that the earnings management and its false report have become very serious. Although the problem of earnings management has been attached importance to some relevant persons and been regard as "the most urgent problem that need to be studied and solved in the field of accounting", the effect of the current research is not ideal because of the faint cognition of our government and the society on the earnings management and its economic consequence as well as its complicated problems.According to these reasons, the writer started this dissertation on the basis of his systematic study on the current domestic and overseas researching status. This dissertation can be divided into five chapters.The first chapter discussed the definition and the theory of the earnings management. The earnings management is a new concept and there are no definite interpretations on it. According to general understanding, the earnings management is a legal but not reasonable concept. This dissertation gave a totally new explanation on it from the investor's angle: it included the legal earnings management and illegal margin manipulation on the basis of whether it would arouse the investor's misunderstanding according to the Information Doctrine, then the writer discussed its essence and scope respectively, and finally explained the economic and managing root of earnings management at large on the aspects of Agent Theory, Asymmetric Information Theory and Scientific Behavior Theory.The second chapter discussed the environment and the motivation of the earnings management. The behaviors of earnings management are not occasional and isolated but the result of people's chasing after interests and special system. So the system environment on which the earnings management exists and the motivation of participants are the key for us to understand it entirely. In this chapter the writer first analyzed the economic, moral and system environment of the earnings management andconsidered that the hole economic and moral environment would bring effect to enterprises' earnings management, but the radical influence is the system environment of corporate governance, corporate supervision and CPA auditing.Then the writer studied on the motivation of earnings management in Chinese listed companies and found that the Chinese earnings management still had the distinct characteristic of opportunism and policies. On this basis the writer concluded the six motivations of earnings management that met with the situation of China, and the cases analysis. Earnings management is regarded a...