Study On Earnings Management Under New Accounting Standards

The Ministry of Finance of the People's Republic of China formally announced the new Accounting Standards for Business Enterprises('ASBEs') on February 15,2006. The ASBEs become mandatory for listed companies in China on January 1, 2007. In the time of the issuance of new accounting standards, this paper focuses on the relationship between the earnings management and accounting standards by taking the latest developments of earnings management into account. On one hand, accounting standards effectively restrict the occurrence of earnings management, but it is unable to eliminate earnings management completely.On the other hand, earnings management provides evidence for setting of accounting standards, which is helpful for the improvement of accounting standards.This paper summarizes the earnings management's causes and its methods which the listed company may utilize under new accounting standards on the basis of explaining earnings management. And it analyses the relationship between the earning management and the accounting standards, the changes of the new principles, and the new accounting standards'impacts on the earnings management. Then this paper adopts the empirical method to study the impact that leaves in the different sectors. In view of the different impacts of accounting standards'changes on the different sectors,this paper presents an assumption that there are differences among the impacts of new accounting standards on different sectors'earnings management,and uses cross-section modified Jones model to prove it. Finally, it sums up the discernment methods of the earnings management behavior of listed company in terms of investors and other information users, and puts forwards the countermeasures of conducting the earnings management behavior from different perspectives.