The Theory Analysis And Empirical Research Of Earnings Management

Earnings management is an important issue in accounting world for a long time. At first, this paper expounds the meanings of choosing the topic and the present conditions of the research about it in home and overseas. The researches overseas focus on the existence and motivations of earnings management. And the researches in home include two hands. One hand is the researches about the theory of earnings management and the other hand is the standard or empirical analysis about earnings management and has some suggestions for it. Then the paper introduces the base of theory about earnings management. Among it first introduces the implication of earnings management. Then it introduces five characteristics of earnings management. And the ways of earnings management include income smoothing, the minimizing and maximizing of earnings. And the methods of earnings management have accounting changes, the adjusting to the actives of management and using the deal among the connected sides. Then the paper analyzes the reasons of earnings management. Among it the paper analyzes the objectivity of the existence of earnings management and the reasons of earnings management in Chinese listed company. Then this paper analyzes the behavior of earnings management by the deed theory. In the empirical part of this paper, it collects the listed companies having the discretionary accounting policy changes in the period from 1998 to 2002 as researched sample. On the base of not finding the effects of industry factor, at first, using the Crosstabs analysis, the paper demonstrates that the existence of income smoothing, taking a big bath and inducing earnings management in Chinese listed companies. Then the paper analyzes the deed motivation causing the above behavior of earnings management by Means test and Logistic regression and finds: income smoothing has positive correlations with firm size, price limitation and reward deed; taking a big bath has negative correlations with firm size and has no correlation with price limitation and reward deed; inducing earnings management has negative correlation with reward deed and has no correlations with firm size and price limitation. Then the paper chooses some typical cases to analyze. The analysis finds their accounting changes produced big influence in that year and connected with inducing motivations in some degree. And then the paper put forward the ways and the suggestions which can avoid the earnings management of the Chinese listed companies. They include decreasing the possibility of managing earnings by discretionary accounting policy changes, perfecting the policies to take charge of the security market furthermore and standardizing the relation between the government and the companies and the behavior of the managers of the companies. And the last part is the conclusion of this paper.