Information Disclosure Quality And Earnings Management

Financial report and information disclosure of listed companies are two main factors that influence the information asymmetry between managers and investors. In general, economic theories and anecdotal evidences suggest a negative relationship between disclosure and information asymmetry. Prior research indicates that greater disclosure level reduces information asymmetry level, and demonstrates the relationship between information asymmetry and earnings management. This paper examines the relationship between information disclosure quality and earnings management, based on prior research.Prior researches analyze the relationship between disclosure and information asymmetry, and find that greater disclosure level reduces information asymmetry level. Then with the development of earnings management, they begin to research the relationship between information asymmetry and earnings management. This paper examines the relationship between information disclosure quality and earnings management, based on prior research. We selected Shenzhen listed corporations as research objects, use ratings published by Shenzhen Stock Exchange, and discretionary accruals from the modified Jones model to measure earnings management. We research the effect of the relationship between disclosure and earnings management on efficiency of capital market.This paper contributes to disclosure research and earnings management research in three respects: 1.The disclosure levels of Chinese listed corporations increased from 2001 to 2006.The greater disclosure level corporations have low leverage and good performance. 2. The earnings management levels of Chinese listed corporations decreased from 2001 to 2006.The lower earnings management level corporations have good performance.3.This paper's empirical result suggested a negative relationship between information disclosure quality and earnings management.