A Research In The Relationship Between The Listed Companies' Degree Of Earnings Management And Availability Of Credit Financing

In the current rising cases of international status and economic impact, commercial bank loan risk in China is rising too. The quality of accounting information has always been the capital channel for commercial banks to get financial condition of firms both in loan auditing and in process monitoring, so the quality of accounting information is the focuses of banks. However, as a kind of opportunism behavior, earnings management is to cause certain economic consequences. How to regulate and improve the quality of accounting information of listed companies, how to improve the efficiency of bank credit facilities are problems crying out for solutions.This paper take 599 listed companies on A-share in Shanghai and Shenzhen stock market during 2006-2008 as samples which meet the credit financing conditions, to find the relationship between the degree of earnings management and availability of credit financing from a microscopic point of view, aims to disclosure current degree of earning management of listed companies in China, find out the main factors influencing bank credit loans to guide the behavior of accounting information disclosure and to find out effective way to improve its banking efficiency of enterprises.This paper uses the Modified Jones Model to evaluate the degree of earnings management and tries to establish indexes to examine availability of credit financing of listed companies from both the ability of getting credit loans and scores of credit loans. Besides, this paper takes data from credit loans research database system and bases on it to research the relationship between the degree of earnings management and the efficiency of credit financing in listed companies of different degree of earnings management. Meanwhile the credit financing is influenced by many factors which are controlled in the thesis: such as return on assets, asset-liability ration, firm size, growth rate, operating cash flows, financing cash flow needs, asset limit, audit opinion, the nature of equity, market-oriented, bank loans, equity refinancing conditions and other factors, we test the hypothesis of the samples in two ways:①Comprehensive examination of all the test sample by regression in the year of 2006-2008;②we divide the sample into four sub-sample based on the direction of earnings management and the nature of ultimate controller in companies, including positive and negative earnings management sample, state-controlled and non-state-controlled sample to verify the stability of the conclusions among different samples.Depend on the description of variables and sample test, we can draw some conclusions. The higher degree of earnings management leads to the lower ability of getting bank loan; the higher degree of earnings management leads to the lower scores of credit financing. Moreover, the study found that the degree of positive management is generally higher than the degree of positive management in listed companies; the efficiency of credit financing of state-holding enterprises are significantly higher than other companies. Finally, the paper proposed a series of policy recommendations based on the research results to regulate the behavior of earnings management of listed companies to help them to improve its ability of getting credit financing.