Under The Control Of China's Largest Shareholder, Earnings Management Research

In the western theory, the topic of earnings management has more than twenty years research history. But the theory of traditional corporate governance believes that the principal contradiction of company proxy question is between exterior investor and the management level, therefore the hypothesis of western classics earnings management research is share dispersing and separation of ownership . But major stockholders have the ultra strong control condition the listed company in our country. So they can control decision-making and operation of listed company without very little challenge and resistance from other shareholders .therefore the basic characteristic of listed company earnings management is under the majority control in our country. The paper begins with the characteristic of the majority control in our country .Then it analyses the earnings management of listed company with our country special institution background though the relations between the earnings management and the majority control ,legal person's shares ,asset combination and the characteristic of stock market system .After that , it explains the difference of earnings management between under the the majority control and share dispersing . And then it analyses the strategies which have related-party transactions and accounting policy changes, accounting estimation changes through the case studies under the majority control earnings management mainly to have the connection side transaction and the accounting policy change and accountant estimates the change. The related-party transactions is the most commonly used method, mainly including the asset management, the asset combination and the capital taking connection. through this case research This paper also further discovers the behavior of "pulling" and "tuneling"by the major stockholder when they help listed company carrying on the earnings management .The earnings management not only affects the accounting information reliability seriously ,but also has harmed the little shareholder's benefit, moreover hinder the best disposition entire social resources, which is disadvantageous to health development of the market economy and the capital market. The measures to questions which discovered through the case analysis of the earnings management under the majority control include consummating supervising and managing of related-party transactions by accountant standard, strengthening the outsidesupervision environment(legal institution ,supervising and managing organization,exterior auditing) and consummating corporate interior governance and the controlstructure.