Research On The Correlation Of Institutional Investors And Corporate Earnings Quality

Accounting Earnings is the important information that can reflect corporate operating results during a given period of time. Besides, it is also the important index for creditors and investors to acquaint themselves with the corporate. In recent years, a series of financial fraud cases have made accounting earnings been greatly concerned. Consequently, how to improve the quality of accounting earnings has become a long-concerned problem in theoretical and practical field. Meanwhile, with the development of securities markets, the proportion of institutional investors holding has increased. They are on their way to become active shareholders, abandoning their role of passive investors. Thus, the rising of shareholder activism of institutional investors has urged the research of the relationship between institutional investors and accounting earnings been carefully studied home and abroad.Based on behavioral finance theory, principal-agent theory and property rights theory, this thesis try to sort out the outline and the causes of shareholder activism of institutional investors. Furthermore, the thesis has testified the influence of shareholder activism of institutional investors to the quality of accounting earnings from three respective of cause analysis, game analysis and mode of action. In the empirical test part, the thesis chooses the 2005—2007 of China's domestic A-share listed companies which was injected by institutional investors as a sample. Then, basing on the earnings response coefficient model examines the relationship between institutional investors and earnings of listed companies.The research shows that on the whole China's institutional investors has enhanced the quality of listed companies'earnings, while institutional investors of different types vary in their influence to earnings of listed companies. In order to further test whether split share structure reform would influence the institutional investors'effect on list companies'earning qualities, this thesis uses the proportion of outstanding shares as the substitution variables for split share structure reform and does empirical testing. The result is that share changes in circulation have not greatly enhanced institutional investors'influence on listed companies'earnings. Finally, according to the findings, this thesis gives some advices on how to develop the institutional investors.