The Empirical Study About Institutional Shareholders And Earnings Management In The Listed Company

The theory of Ownership Structure Balance holds the idea that the reasonable equity arrangement can promote the formation of balance and mutual supervision between shareholders, and then improve the corporate governance structure and the quality of accounting information in the public companies. As new participants, institutional investors hold the stocks of the listed companies and become the shareholders of these companies with the advantages in information, scale and knowledge. While in order to verify whether institutional investors can participate in corporate governance actively and supervise the management, this paper discusses the relationship between institutional shareholders and earnings management. This study takes the listed company in A share main board stock markets of Shanghai and Shenzhen as the lord sample. Considering the whole institutional investors'shareholding in a listed company, the difference among institutional investors that hold different share ratio and the difference among different types of institutional investors, this paper studies the institutional investers'influence on earnings management. The results indicate that:(1) The whole institutional investors restrain the listed companies'earnings management behavior, and to some extent play a positive role in corporate governance. (2) Different institutional investors with different shareholdings play different role in paticipating corporate governance, with lower shareholding (less than 6%), institutional investors always take short-sighted action, and tend to encourage the listed companies' earnings management behavior; with higher shareholding but lower than absolute control level (more than 6% but less than 30%), the institutional investors have motivation to supervise the management, and restrain the earnings management behavior of the management; while when institutional investors' shareholding reach the absolute control level, then insider control phenomenon occurs, earnings management phenomena aggravates. (3) Different types of institutional investors have different influence on corporate governance, Securities Investment Funds have an obvious effect on corporate governance, other types of institutional investors don't play its proper role on corporate governance for their immaturity. Finally, based on the research conclusion, some suggestions about how to develop institutional investors and make them positive investors while participating in corporate governance in the future.