Earnings Management Research Based On Corporate Life Cycle

The western accounting scholars started to pay close attention to Earnings Management since 1980s, and yielded a rich harvest of research results. But in China, it is only the beginning, especially for the empirical research of Earnings Management. Earnings Management is known as the corporate administering authority change the result of financial report through making choice of accounting policy or fabricating transaction by their professional judgment, which will result in misguiding the decisions of interested parties, which base on the corporate economic performance, or the contractual behavior which bases on reported accounting numbers. It is broadly used by both big and small companies, so the research of Earnings Management behavior is becoming an important area of modern accounting theory. In-depth research of Earnings Management behavior can not only contribute to improve the accounting standards, corporate governance and optimization of performance evaluation system, but also can promote the development of the accounting theory itself.This paper is in research of earnings management at the point of corporate lifecycle, try to summarize some disciplines, through the study of different motives and means of earnings management at different corporate lifecycle. It is hoped to be useful for the investors who can identify the truth of corporate accounting information and for the better precaution of supervisory authority towards the overmuch earnings management behavior, as well as for solving the problem of accounting information distortion, etc.Bases on the theoretical research, This paper does an empirical research of the earnings management motives and means with regard to the Chinese information technology listed companies, which from the view of corporate lifecycle. Through the valuation of earnings management by using the modified"Jones"model, it compare the level, direction and means of earnings management, among different corporate lifecycles by the descriptive statistical method, and find the relationship between the different earnings management means and different corporate lifecycles by the linear regression model finally. On the basis of above theoretical research and empirical analysis, the conclusions are summarized as follows:(1)For information technology listed companies, the level of earnings management is higher on the decline stage, lower on the pioneering and growth stage, lowest on the maturity stage;(2)For the means of earnings management of information technology listed companies, advanced verify of revenue and R&D of intangible assets are mainly adopted on the pioneering stage; transactions of funds are mainly used on the growth stage; more means are tend to be used on maturity stage, such as allowances for assets impairment, income/loss on investment, transactions between related parties, and so on; subsidies income are often used when companies are on the decline stage;(3) The discretionary accruals of the companies on pioneering stage are positive, often be used to increase profit; the discretionary accruals of the companies on growth stage are little negative, which be used to smooth profit; the discretionary accruals of the companies on maturity stage are negative, always be used to reduce profit; the discretionary accruals of the companies on decline stage are positive, ofter be used to increase profit.(4) In consideration of the features about the corporate operation, finance and financing targets on different stages, the preferred earnings management strategies on different stages are concluded as below: pioneering companies often aim at maximum of profit; companies on growth stage are inclined to smooth profit; mature companies always carry out the profit-minimum strategy which should be based on the stable increase of profit; declined companies mostly want to maximum the loss but retain the"shell"resources.