Study On Earnings Management Based On The Majority Control In Listed Companies

As a focus of Western accounting, earnings management is a topic which has more than twenty years history of research. According to the Traditional corporate governance theory, the principal contradiction of company proxy question is the conflict of interest between exterior investors and the management level, therefore the hypothesis of the western classics earnings management research is the separation of ownership. As the scope of research continues to be expanded, many scholars have found that ownership concentration has gradually become the dominant type of shareholding structure since the 90s of the 20th century. China's economy is currently at the "emerging and transitional" stage, and there are a lot of differences from the backgrounds of mature Western market economies. As the completion of the share reform, the absolute controlling shareholders are reducing gradually, and ease the situation of "dominance" in the listed companies in China to a certain extent, but still more common than controlling shareholder. In the listed companies in China, the major shareholders have the ultra strong control condition the listed company in our country. So they can control the decision-making and operation of listed company, without very little resistance and challenge from other shareholders . Therefore, the basic characteristics of earnings management in listed companies is under the majority control in our country. (Li Dong ping, 2005).This paper, first, combs and evaluates the definition of earnings management, motivation and the means from the research. Secondly, according to the characteristics of Chinese securities market in China, I analyzed the listed company earnings management motivation and commonly used method, in addition to explain related management background of the big shareholders of listed companies in China under the control of earnings management, I illustrates difference between earnings management under the majority control and general earnings management. Then, through the first empirical analysis of the existing big shareholders listed company earnings management behavior more significant in the first. Then, it analysis is further studied the strategies which have related-party transactions and changes in accounting policy or accounting estimates through the second empirical under the majority control earnings management that the most commonly used one. Through this empirical study found, compared to he separation of ownership, the major shareholder when they carry on the earnings management, they prefer related-party transactions which has more strong concealment. In the end, the paper with related-party transactions as a starting point, specific policy recommendations to reduce the space where the majority carry on the earnings management.