An Empirical Research Of Chinese Listed Company's Earning Management Based On Corporate Governance Structure

With the establishment and improvement of China's modern enterprise system, the earnings management is getting more and more focus from all walks of life, and has been researched systematically by some domestic scholars. However, most of the researches take canonical analysis, many of which are not sufficient and complete, as their research method, and very few empirical research results have been found. This paper, starting from corporate governance structure, aims to chase down the existent mechanism in listed companies that gives rise to earning management phenomenon.On the basis of former researching, the author has completed a serious works. First of all, make a conclusion to the basic theory of earning management, corporate governance and the relationship of the both. Second, mainly using Modified Jones Model and Industry Developed Model to calculate the dominant accruals, the author made the OLS analysis of it, which is the measuring index of earning management. Third, observing the regression coefficient's situation and outstanding index, the author tried to find out the initial relationship of earning management and corporate governance structure. Forth, making use of OLS regression result, the author gave a Dichotomy Logistic Regression to 46-listed corporation's original data, the result of which is the earning management predict model. The outcoming of authentic proof shows that the problems exist in listed-corporation governance structure. At the end of the article, consequently, the author gave forward to a serious of suggest aimed at these problems, hoping to perfect the governance structure.The research subject of this paper is listed company that practices earnings management. The author gave definition to earning management index and corporate governance index around the subject. Among them, the index standing for earning management is dominant accruals; And those for governance structure are shareholding structure, directorate structure, supervisor structure and dual director-manager; The index standing for motive of earning management are total debt over total assets and whether pre-managed earnings higher or lower than based quantity. The research methods applied in this paper are bivariate analysis, multiple linear regression, and binary logistic regression.Through researching, the author finds that lined corporations when whose total debt over total assets are high and pre-managed earnings are higher (lower) than based quantity are inclined to practicing earning management. Independent directors can restrain the initial managers from practicing earning management when they making income increasing dominant accruals, while the independent directors have no prominent influence on making dominant accruals decreasing. The author finds no evidence that the presence of dependent supervisors affects the probability of initial managers' income increasing or decreasing manipulation. Besides, the results indicate that listed corporations with dual director and manager have the bigger likelihood to manipulating earnings.Accordingly, the author believes that the key to constraining the earning management problem of listed companies is to improving corporate governance structure gradually. As a completed securities market, that is the essential condition.