Study On The Influence Of Listed Companies' Earning Management On Earning Information Quality

The earning information as an important basis for information stakeholders making decisions, people's requirements for the quality of it are increasing and its quality gradually draw the attention of accounting scholars. Earnings management (EM) is an issue central to empirical accounting research in USA in the last 20 years. Many accounting scholars have done a lot of empirical research, including studying on the relevance of earnings management and earnings quality. Although there are a lot of literatures on earnings management, earnings quality, earnings management and earnings quality research. There are a little literatures on the similarities and differences between earnings information quality and earnings quality, the influence of earning management on earning information quality etc. Based on this background, this paper aims at defining the extent of earning management and analyzing the impact on listed company's earning information. First, this paper analyzes the definition, motivation, method and measurement method and future of Chinese capital market. With 1127 listed companies as sample and their data from 2004 to 2009, the paper calculates each company's earning management situation. Based on the result of the information, we aim to study the influence of earning management on earning information quality. The research's conclusion shows that the extent of earnings management of listed companies in China's capital market was decreasing. The neutral of earnings information quality was improving. When other conditions remain unchanged, the quality of earnings information is basically in the gradually increasing .This study has some limitations. First of all, in actual business environment, cash flow can be manipulated, but this paper is based on cash flow non-manipulation; Secondly, the model in the paper default that earnings management is caused by the accrual-basis, which is inconsistent with the Generally Accepted Accounting Principles; Thirdly, the quality of earnings information has many factor of evaluation, this paper only evaluate neutrality of earnings information quality from the perspective of earnings management.