A Study On Earnings Management Of Chinese Listed Companies

The thesis studies an important problem during economic development of China. It is earnings management in Chinese listed companies. Listed companies are the major part of the stock market. The financial reports listed companies providing for investors are important basis for stakeholders' decision making. At the same time regulators depend largely on such financial index as ROE to assess operating performance of listed companies. Earnings can pass information to the stock market. Excessive earnings management may result in serious consequences. By the way of earnings management, managers can achieve different aims. The thesis compares earnings management in China and the United States, analyses the internal reasons of earnings management at the respect of accrual accounting and principal-agent theory. Then the thesis discuses the stimulating and constraining factors for earnings management on the basis of institutions economy. After analysing the testing models for earnings management, an empirical study is made to test the common characteristics of those listed companies which managed earnings. At the end of the thesis several pieces of advice were given to weaken earnings management. The thesis finds as followings:â‘ There is earnings management in almost every stock market. there are something in common. However in different circumstances, earnings management has different incentives and artifices.â‘¡For the reason of accrual accounting and principal-agent relationship, earnings management is inevitable.â‘¢The stimulating factors play a more important role on earnings management. And the role of constraining factors is weak. So the managers prefer to manage earnings.â‘£The empirical research finds out some common characteristics in the samples which have managed earnings.