Empircal Study Of Revolving Door,Government Intervention And Earnings Management

Western scholars define the role of government intervention in economic operation generally as the "three hands", namely the invisible hand. the helping hand and the grabbing hand. And different hand has the different influence on the economical movements. The government intervention exists generally in our country. It not only carries on the regulation to the macro economic movement, but also governs enterprise indirectly or positively through the implementation of policy rules, the state-owned stockholder's rights, the administrative appointment of business management level and so on. Thus it carries on the intervention to the microscopic enterprise,too. Especially in 2008, financial crisis spreaded all over the world. In order to guarantee the economy growing steadily, the government had implementing lots of regulative measures, including the macroscopic and the microscopic. Then how the government interventions will affect to the enterprise? What kinds of relationships does it exist between earnings management and the enterprise?Scholars certify the phenomenon that the public accountants enter the clients' companies after they leave job from accounting firms known as the "Revolving Door Effect". This kind of effect maybe impact on the auditors' independence of present accounting firm potentially in the future.Firstly. this article reviews in the literature summaries of theories and the predecessors' studies which relate to earnings management. the government intervention and the revolving door effect. Secondly, this article selects 1118 enterprises as researching samples from China' stock market in 2008.Thirdly, it has calculated discretionary accruals by modified-jones model, constructed variables to substitute the government intervention and the revolving door effect. Finally, it examines relations among government intervention, revolving door effect and earnings management by using the average value inspection method, multiple regression method.Empirical results show that:firstly, earnings management of state-owned enterprises was significantly higher than non-state enterprises. but it does not exist significant relationship between earnings management and the property system. Secondly, there is no significant correlation between earnings management and state-owned shares or the shareholding ratio:Thirdly, the market index and earnings management have a significant correlation. Larger the market index, higher level of earnings management the enterprises are. Finally, there is no significant correlation between revolving door and the earnings management. Earnings management degree of enterprises which have revolving door effect is not higher than that of haven't.