Empirical Research On Earnings Management In List Companies

The securities market is an important part of the contemporary economy and is the important tools that the market economy collocates the social resources. The listed companies, which are the model forms of the company system, play an important role in the securities market, the financial information especially the accounting earnings information of the listed companies is a very important and sensitive index, more and more policies, codes, and ordinances on the securities market regard directly or indirectly the accounting earnings as the assessing index, which makes the importance of the accounting earnings information more outstanding. In this condition, the administrators of the listed companies who know the true accounting earnings information would make earnings management for some purpose, which has become one of the focus concerned by investors, creditors, securities supervise sections, accounting standard formulating branches and taxation institutions during the development of the securities market.The subject of earnings management has been studied for more than twenty years in Western accounting theoretical circle. With the development of stock market and the surging of listed companies in our country, earnings management turned up in listed companies, which has became one of the new subjects of accounting theory. Earnings management has both positive and negative effects on our economy. However, earnings management has been abused in listed companies that its negative effect has already exceeded its positive effect. Hence earnings management has become one of the most important causes for accounting information distortion. In order to solve the problem of accounting information distortion and develop the stock market, it is necessary to probe into the issue of earnings management in listed companies. Considering this point, I tried to study the subject from several major perspectives.Earnings management is a kind of rational behavior. Contracting frictions between listed companies and the other sides shows that behavior of earnings management is inevitable. And asymmetrical information provides possibility. Besides those two points, listed companies also have a great diversity of motivations and ways. Based on analysis of cost and income of earnings management, it is out of question that income exceeds far from cost. As a result from Chinese specific issuing institution, qualifications of rationed share acquisition is a kind of scarce resource. Meanwhile, on condition of having the right of qualification of rationed share acquisition, listed company can raise a considerable amount of capital, even exceeding the capital of initial public offering. Compared with income of enforcing earnings management, cost is relatively small.By positive studies, the phenomenon of earnings management of listed company is ubiquitous indeed. The listed companies, which attain the right of rationed share acquisition and avoid being delisted due to a loss for the last 3 consecutive years, have the strongest motivation of manipulating the earnings. Major reasons are as follows: right of rationed share acquisition and secondary financing is an important scarce resource and has rich income, which correlates closely with Chinese specific securities issuing institution Anyway; it slowly becomes milder along with more perfect supervise institution. Chinese securities market is still an immature one and its institution constraints need further perfect. Institution evolution prompts information disclosure of listed company to change. It shows that abnormal react of listed company result from new institution enforcement. In general however, Chinese securities market increasingly trends towards maturity. And the decree, which China Securities Regulatory Commission enacts, is effective to add violation cost and has their power to deter.The thesis starts with defining of earnings management, and resolves its negative effect by probing modes of earnings management in existence. With analyzing GAAP enacted by Ministry of Finance, its positive effect has been discussed to earnings management.The conclusion of this article is: Earnings management is different from accounting concocting. Earnings management is legal behavior, and it shows a powerful life-force. It has been a basic skill which managers in every big company needed. But it has dual character: Excessive earnings management is harmful to enterprises, to society, and to country. So how to keep watch excessive earnings management is very vital to the country supervise department.