Corporate Growth, Operating Risk And Earnings Management

In the operation of a company, in spite of pursuing high profit of the products and service, one of the most significant goals is to keep the company's growth smoothly in the future. While the investment for expansion is be surely bring the return rate which is higher than the cost of investment. With the wealth of stockholder decrease, they are inclined to sell their stock. Meanwhile, facing with the intense industry competition, the list companies' managers not only have to pursuit the high growth, but also need to consider the operating risk. Because of the above two factors and basing on the revenue's maximizing, managers tend to have the motivation to control the earnings report, which is not good for the capital market. This paper conducts an empirical examination on the causal relationship among corporate growth, operating risk and earnings management.This paper chooses the listed companies during the period from 2007 to 2009 as research samples. By using Jones Model to measure the discretionary total accruals as the proxy variable of earnings management, by building the multivariate regression model to analyze the effect of corporate growth and operating risk to the degree of earnings management.This paper finds the result that from the year 2007 to 2009, list companies do have earnings management most of which are positive and they are in the growing period. The relationship between corporate growth and earnings management is significantly negative, while significantly positive on that of operating risk and earnings management.