The Empirical Studies On The Relationship Between Corporate Governance Structure And Earning Management

Earning management has received broad attention all over the world, and the researches on it mostly focused on fields like motivation and measures, etc.. This thesis aims to study the mechanism how corporate governance restricts earning management. Based on the Principal-Agent Theory, the thesis firstly analyzes the influences of corporate governance structure on earning management from theoretic perspective, and then tries to testify the distinctive relations between them. Finally, the appropriate proposes of improving governance structure will be put forward to effectively restrict earning management.The thesis chooses 498 companies listed in Shanghai and Shenzhen Stock Exchange from 2006-2007 as the research objectives, and applies multiple linear regression to do empirical study of relations between earning management and corporate governance structure including management stimulation, ownership structure and characteristics of board of directors. The research results indicates that earning management is positively related with manager compensation, but negatively related to the rate of share management held; As for ownership structure, earning management is positively related to the rate of state-owned share, but negatively related to the rate of public share; In terms of characteristics of board of director, earning management is negatively related both with the rate of independent directors and size of board of supervisors.According to the research results, the incentive mechanism for management of our listed companies is simple and short of stock option incentive plan. However, the ownership structure is becoming more reasonable along with the deepening of non-tradable shares reform, meanwhile, the enhancement of board of director's independence and board of supervisors'size will effectively restricts earning management, especially the below-the-line items.