| Earnings management of listed companies in China is a common phenomenon, and brings some adverse effects to the normal operation of the market economy. From the system level, accounting standards and corporate governance mechanisms are the main factors to influence and restrict the earnings management behavior of listed companies.The accounting standards for enterprises has certain accounting policy options, the enterprise which has the options can properly reflect its business activities and financial results in a timely, but the premise of this result is that the enterprise has a perfect governance mechanisms.If the company doesn’t have a perfect governance mechanism, the controlling shareholders and management may use its functions and powers of the accounting information gain advantage, abuse of accounting policy choice, the implementation of earnings management, has reached for personal benefit purpose.Based on this, scholars believe that the impact of corporate governance mechanisms on earnings management is greater than the impact of accounting standards.Thus, government authorities tried to learn from the advanced theory and experience to improve the level of corporate governance of listed company in China, to play the company governance in the suppression of earnings management, but with little success.Because of earnings management brought the capital market financial scandal still continues, so we need to path, not only to concentrate on the corporate governance into the influence of earnings management, but also consider the external market competition environment on the influence of earnings management.Modern competition theory suggests that as one of the external corporate governance mechanism, product market competition can through the internal management mechanism to affect the earnings management.On the basis of existing research,combming with information asymmetry theory, the principal-agent theory, modem competition theory as well as the realistic background of China’s enterprises, this paper will put product market competition, internal corporate governance mechanisms and earnings management into study a logical framework. In theory, the paper studied the impact of corporate internal governance mechanisms to earnings management, and the combined effects of product market competition and internal corporate governance to earnings management. Meanwhile, based on2006-2008unbalanced panel data of the Chinese stock market listed companies, this paper examines the impact of equity management, board of directors to earnings management of listed companies, as well as the combined effects of competition in product markets and equity governance, board of directorsr to earnings management.1, The Purpose and Significance This article aims to systematically the results of previous studies. On the basis of the STATA software for statistical analysis tool, the article uses the empirical research to analysis the impact of internal corporate governance mechanisms to earnings management, and the combined effects of product market competition and internal corporate governance to earnings management, reveal the complementary role of product market competition on corporate governance, and to enrich the research in the field, and provides a theoretical guidance for our corporate governance. Specifically, this study makes investors better assess the earnings of listed companies and found that earnings management behavior, help it to adjust the investment strategy.2, Research Methods In order to achieve the goal of this study, this paper combined with the specification and empirical research methods, specifically:(1) documentary research. The literature sources for this study are the Library’s database of the Southwestern University of Finance and Economics, such as CSMAR database and CAJ full-text database, VIP academic journals database.(2) Comparative analysis. The paper compares researches at home and abroad which study the product market competition, the corporate internal governance and earnings management, then sums up a useful conclusion.(3) Empirical analysis. The empirical research is the main research method is adopted in this paper. First, according to the literature of study suggests the hypothesis, and then construct the empirical model, and finally according to the data analysis results of this hypothesis verification, draw the conclusion3, Research Ideas The paper is divided into four parts:The first part describes the background and significance of this study, as well as the concept of earnings management. At the same time, the first part also reviews the motivation of earnings management, the impact of internal corporate governance mechanisms to earnings management, and the impact of product market competition to earnings management.This section contains the first chapter and the second chapter. On the basis of the reviews, the second part further detailed theoretical explanations and propose the research hypothesis. This paper studies two aspects of internal corporate governance mechanism, that is, Equity governance and Board governance. The Specifically Hypothesis as follows:Hypothesis1:equity balance degree and earnings management is negatively correlated; Hypothesis2:ownership concentration and earnings management to show U-shape relationship; Hypothesis3:Product market competition can play a complement role to the affect of equity governance to earnings management; Hypothesis4:the size of the board and earnings management to show U-shape relationship; Hypothesis5:the proportion of the independent directors and earnings management is negatively correlated;Hypothesis6:the chairman and general manager as two separate can reduce the degree of earnings management; Hypothesis7:product market competition can play a complement role to the affect of board governance to earnings management.This section contains the third chapter. The third part is mainly to adopt empirical method to analysis the impact of corporate internal governance mechanisms to earnings management, and the combined effects of product market competition and internal corporate governance to earnings management. The third part mainly uses descriptive statistics, correlation analysis and OLS regression analysis to analysis the data. This section includes the fourth chapter and the fifth chapter.The fourth part is conclusions and revelations. Summarize research conclusion and make recommendations. This section includes chapter6.4, conclusions The empirical results of this study:the relationship between equity balance degree and earnings management is positively. Ownership concentration and earnings management is a U-shaped relationship, board size and earnings management was U-shaped relationship, and consistent with the assumptions. The proportion of independent directors and earnings management relations, as well as the post of chairman and general manager of two separation and earnings management are not significant. The text gives a detailed explanation for reason. After the accession to the product market competition, product market competition plays a complementary role on the impact of the internal corporate governance to earnings management.5, Innovation and inadequacies The main innovative point of this article:This is the first that put product market competition, internal corporate governance mechanisms, earnings management into a logical framework to study. Not more scholars’research study like this. In this paper, we review the theory of asymmetric information, the principal-agent theory and the theory of modern competition, to find the product market competition, internal corporate governance and earnings management the connection point, and place them in a unified analytical framework, which can be more systematic and comprehensive analysis to reduce the extent of earnings management of listed companies. This article also has some shortcomings:due to limited time and energy, we can not analysis all internal corporate governance mechanisms, only include selected two major aspects, so we need other researchers to supplementary study... |
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