A Research On The Relationship Between Minority Investor Protection And Earnings Management Of Listed Firms In China

With more than ten years rapid development of our capital market, more and more requests impose on the information disclosure of listed company. Whereas the scandal about the information disclosure of listed company are disclosed constantly and earnings management is the dominating problem. The manipulation of earnings information will result in serious asymmetry of information and affect allocation of resource. It will also greatly damage the minority investors who are in the inferior position. At present, the law and institution about the investor protection have already been set up in our country. However, they have a lot of insufficiency compared with the western countries. Moreover, the economic development level is inconsistent among different areas in our country. So is the investor protection level. Therefore, we will try to study earnings management from the prospective of the investor protection.We adopt academic and empirical ways in this paper. After the retrospective of some related documents both at home and abroad and the analysis of basic theories, we put forward the hypothesis that the minority investor protection has negative relevance to earnings management. Then we make a design and construct relevant models. In the process of the empirical study, we construct investor protection variables of 31 areas in our country to test the relationship between the minority investor protection and earnings management. The result of the empirical research shows that the three independent variables which measure the minority investor protection have negative relevance to earnings management. Finally, combining analysis with conclusions mentioned above, we take some countermeasures to improve and perfect the minority investor protection institution so as to decrease the earnings management behaviors, improve the quality of finance reports and protect investors better.