CEO Source, Ultimate Controller And Earnings Management

In the context of a growing economy、the capital market maturing and the gradual improvement of the accounting system, earnings management remains a key issue. Earnings management has two sides, moderate earnings management discretion is given to the rational use of accounting standards, and excessive earnings management would harm the interests of investors, in the long run it will certainly not conducive to business and society as a whole configuration of resources.As the main operator of earnings management from the change of the company’s executives CEO, CEO is bound to affect earnings. In the event of change of corporate CEO should promptly CEO succession planning process and weigh the cost of doing business is the process proceeds, and the source of corporate CEO to CEO succession planning a top priority.This article will be divided into external sources of CEO Succession sources and internal sources of succession in the whole process of CEO succession from different sources exhibited different earnings management behavior is the main content of our study, the paper by selecting the relevant variables through empirical methods to Discussion on Present sources listed company CEO on earnings management profound impact on the relationship.In so doing, not only help enterprises reduce employment costs, but also improve corporate governance, companies have chosen to provide the empirical basis for the CEO succession source, and ultimately improve the performance of enterprises, in order to promote the sound development of the company; on the other hand is also beneficial for the external investment and creditors to make a reasonable decision, can provide reference data for the regulatory authorities in advance to predict earnings management behavior of enterprises, effectively perform its regulatory responsibilities, improve the relevant legal system.In this study, based on the article added to the final controller of the intermediate variables, from the actual situation in China, the ownership structure of most listed companies are more concentrated, especially more significant in our country, the majority of our business is directly under the central government or by local, this is the study of China’s actual situation is even more effective, we walked along the whole chain of control, shareholders will ultimately be traced back to control people, or have absolute control of listed companies who can affect this absolute control over the listed company CEO making decisions affecting their willingness to disclose information to further reveal the ultimate controller of how it affects the relationship between the CEO and the source of earnings management.Based on the theory of principal-agent theory, asymmetric information theory, the use of themodified Jones model, in-depth analysis of the CEO of Origin, final control relationship between man and earnings management, based on a detailed review of the relevant literature at home and abroad early on, selected 2011-- Shanghai and Shenzhen a-share listed companies in 2014 CEO change as the research object, through the manipulation of accruals earnings management metrics empirical test, and on this basis, according to the different modes of succession of the CEO change points CEO succession is internal and external CEO succession, regression testing through descriptive statistical analysis and modeling, the following conclusions:1, earnings management motivation occur CEO turnover is more intense. Compare occur CEO turnover in corporate earnings management degree higher than the degree of earnings management does not occur CEO turnover of enterprises by empirical analysis. This is due to either leave or a new CEO successor CEO, for their own interests, have engaged in motivation of earnings management.2, compared with the internal external successor CEO successor CEO, there are more significant earnings management behavior. That is when the CEO office, external successor CEO to report better performance to quickly establish a good reputation for itself, external successor CEO will have a strong incentive to manage earnings to regulate corporate profits. Early internal successor CEO tenure is generally not a radical reform of the enterprise, we will maintain the current status of the development of enterprises, so the motivation of earnings management is relatively weak internal CEO succession.3, the controlling shareholder of state-owned properties weakens the forward earnings management of early succession external successor CEO. External successor CEO will be served at the beginning of positive earnings management, and when the state-owned enterprises as the nature, on the one hand the social responsibility of enterprises is relatively high political cost to be borne is large, so to some extent, weakened the earnings management motivation. On the other hand the nature of state-owned businesses are more easily obtain or facilitate access to government procurement opportunities for cooperation with other state-owned enterprises, the performance of the external pressure so smaller successor CEO, will also reduce the motivation of earnings management.Finally, based on the above conclusions, make relevant policy recommendations from the CEO of their own, and business aspects of government, etc., respectively.