The Impact Of Internal Governance Mechanisms On Earnings Management

Recently,listed companies have sugared up statements and manipulated profits so as to manipulate stock prices repeatedly.A large number of listed companies have been surveyed.Research data also shows that there are generalized acts of earnings management in Chinese listed companies widely.Due to the impact of earnings management,the reliability and relativity of surplus as one of the significant accounting information decline badly,what mislead the decision-making of investors and other information users and make it difficult to optimize the allocation of resources in capital market,endangering the healthy and orderly development of capital market.Study of earnings management can guide investors to invest rationally,and research of the impact of internal governance structure on earnings management can provide empirical evidence for the relevant regulatory authorities and policy makers to constitute policies of accounting criterion more scientifically and improve the company's governance structure constantly.That will help Chinese securities market develop more quickly and more healthily.Make a comprehensive view of the domestic current literature on earnings management,the research of earnings management focused mainly on verification of earnings management in listed companies in a variety of situations,further exploring the motivation and means of earnings management,the level and impact of earnings management.There are fewer researches about constraint factors of the generation and existence of earnings management.On the basis of the analysis of earnings management's constraint factors,from the perspective of the company's internal governance structure,this paper comprehensively inspects the relationship between internal governance structure and earnings management,through empirical testing exploring the deep relations at the same time.On this basis,this paper presents proposals to improve corporate governance:first,optimizing the ownership structure,including dispersing shareholding,especially reducing the state-owned stocks steadily;introducing banks and internal employee as shareholdings,by means of their dual capacity to play a role in governance;actively cultivating and regulating institutional investors. Secondly,we must improve the system of independent directors,Specifically including:increasing the proportion of independent directors while reforming the equity structure;clearing and realizing the distinction of responsibility and complementarities of functions each other between independent director system and the board of supervisors system;stressing that independent directors are on behalf of the interests of the small and medium-sized shareholders;strengthening the incentive and restraint to independent directors;improving the selection mechanism to ensure the independence and professionalism of independent directors; strengthening the constructing of law about independent directors system,pushing the independent directors' liability insurance system.