The Empirical Research On Earnings Management Preferences

The SOX Act led to the change of the accounting system in the worldwide,and the Accounting standards becames more specific and tight, resulting in earnings management choice has changed in Western countries, that is, from accruals earnings management turn to real earnings management. China has promulgated and implemented the new accounting standards in January1,2007. The New accounting standardsgreatly reduced the space of accruals earnings management in many respects,and securities market's regulatory standards and auditing standards are improving. This article aims to study the change of management's preferences in the new accounting standards,and the causes of the change. This will enrich the theory of accruals earnings management and real earnings management theory,and have an important implications in evaluation of the comprehensive effect of new guidelines and understanding the behavior of listed companies's earnings management in China. Using the empirical research methods,this paper selects China2004-2009's A-share listed companies for the study sample. First, this paper examined the relative changes of the level of accruals earnings management and real earnings management before and after the new accounting standards. It was found that the relative level of accruals earnings management declined after the new accounting standards,while the real earnings management increased. This shows that, as the two earnings management form,accruals earnings management and real earnings management are tradeoff between each other,and the earnings management preferences has changed from accruals earnings management to real earnings management; second, by building the relational model between real earnings management and the capacity and costs of accruals earnings management, this paper studied the reasons for the change in earnings management preferences. The results show that the level of real earnings management related to the capacity and the costs of accruals earnings management,and new accounting standards is a factor of leading to changes in earnings management preferences.This article aims to study the impact of the new accounting standards on earnings management,and the measure of earnings management is a innovation which takes the real earnings management into account. Under the findings of earnings management preferences changing from the accruals earnings management to real earnings management after the new accounting standards, this paper puts forward the corresponding policy and recommendations for the company, government, intermediaries,investors and other information providers and users.