A Research On The Correlation Between Earnings Management And Internal Corporate Governance Structure Of China's Listed Companies

Since 1980's, the western financial academics have paid special attention to the research of earnings management. The issue has become one of the significant topics of today's positive accounting research. Earnings management is not just a kind of accounting behavior. It roots from the conflictions of different stakeholders. And corporate governance is a kind of system to regulate the relationship between different stakeholders. So the effectiveness of corporate governance does affect the behavior of earnings management. But China's scholars just started to study earnings management together with corporate governance in recent years. And most researches apply the method of theoretical analysis with few achievement of positive research. So the paper aims to do positive research on the relationship between earnings management and internal corporate governance structure.First of all, the paper explicates the conceptions of corporate governance and earnings management as well as some related theories. Then from the point of theoretical analysis, the paper discusses the relationship between internal corporate governance structure and earnings management of China's listed companies. Positive research can not be independent from measurement models. Based on analysis of some models of earnings management, considering China's actual situation, the paper designs a new measurement model to measure the extent of listed companies'earnings management. Thirdly, based on the 426 samples picked from the companies whose main business is manufacturing listed in Shanghai Stock Exchange, from the characteristics of board of directors and board of supervisors, positive analysis toward the relationship of internal corporate governance structure and earnings management is conducted applying methods of descriptive statistic and logistic regression analysis. Finally, some advices are given to improve internal corporate governance structure with the hope of constraining the action of earnings management of China's listed companies.