Research On Earnings Management Under Governance Structure Of Listed Companies

Under modern enterprise system, the separation between ownership and control right defines the agency relationship between investors and managers. Due to information asymmetry between them, and the incompleteness of contract signing, which made managers in a relatively information advantageous position. While the existence of "moral problem" made it possible for managers to manipulate accounting earnings, gloss over the financial accounting statements, and distorts accounting information to reflect false financial information to investors, in order to pursue their own interests. Such incidents as WorldCom, Enron, Yin GuangXia etc., have shown that managers distorted finance through earnings management, which caused the company withdraw from the capital market, and made investors suffer huge economic loss.The perfection of internal and external governance structure of listed companies influenced earnings management in a great extent, by means of improving corporate governance structure, reducing agency costs and earnings management act of listed companies, which is an important guarantee for the stable and healthy development of modern companies. In terms of internal governance structure, Chinese listed companies introduced the board of supervisors, board of supervisors, equity incentive and other systems according to "Company Law", "Securities Law", with the aim to reduce information asymmetry and match the objectives of management behavior with the interests of investors in a great extent, and finally reduce agency cost. In terms of external governance structure, the continuous construction and refinement of managerial system, capital markets, product markets, market for corporate control, legal system, which laid a solid external environment for the effective governance of the company? We need to test from the perspective of an empirical analysis to check the role of these systems in China.This article reviewed the research on corporate governance structure and earnings management, then analyzed the concept of earnings management and its causes, and then combined with existing research on the influence that company's governance structure had on earnings management done by international and domestic scholars. In addition, this article also did empirical analysis on the relationship between Chinese corporate governance structure and earnings management, with the application of the panel data of A-share listed company in Shanghai and Shenzhen from 2007-2009.The research results showed that the more times of board meetings, the less of managers' motivation for earnings management; there was "U" shaped relationship between board size and earnings management; the higher proportion of independent directors in board of directors, the less possibility for managers to perform earnings management. For those listed companies whose chairman and general manager are the same person, there is a greater possibility to generate earnings management; there was a positive relation between ownership concentration and earnings management; the higher proportion of shares-holding ratio of state shares, the extent of earnings management in listed companies; the shareholding ratio of exchange-traded share, legal person shares are negatively correlated with earnings management.; the shareholding ratio of management level is not related to earnings management; the size of board of supervisors and their diligence were negatively related to earnings management; the higher level of executive payment and debt financing, the greater possibility for managers to manipulate accounting earnings. Finally, this article put forward policy recommendations in accordance with empirical results.