The Impact Research Of Private Listed Company Governance Structure On Earnings Management

Since reform and open policy, the proportion of private economy of our country in the economic structure has increased year by year, and the private enterprise has grown rapidly. However, at the time of private economy high-speed development, the management problems about the corporate governance increase prominently. As the mechanism, coordinating the relationship of interests among stakeholders, the imperfection of governance structure provided the opportunities for earnings management, at the time,influenced the private enterprise in the long run. Therefore, it was necessary to study the topic about how governance structure influenced earnings management.The paper was divided into three parts:theoretical part、empirical part and conclusion part. The theoretical part mainly described the research significance and methods,also summarized the comment on the domestic and international literature. At the same time, it outlined the related theory about the private listed companies, corporate governance, earnings management. The empirical part established the empirical model of the measurement of earnings management, detailed the empirical results by descriptive statistics and further research, lastly proposed the corresponding countermeasures to improve governance in private listed companies. The last part listed the conclusions and contributions of this paper,as well as, pointed the limitations of the article, and the further research trends.This article selected A-share Private Listed Companies in the Shanghai and Shenzhen Exchange during2006-2010as the research object, the mixed data as the research samples. The relevant model used the non-manipulation of accruals as the explanatory variables, and used the representatives of the corporate governance structure variables as explanatory variables. The model also used company size and asset-liability ratio as control variables. Through the empirical analysis, the article got the following conclusions:Firstly, China’s private listed companies existed the phenomenon of earnings management generally.Secondly, the governance structure of China’s private listed companies existed defections:1, Equity was highly centralized, and "dominance" was serious.2.The supervision of The Directors Board was ineffective.3. The set of The Supervisors Board was useless.4, The management was short of an effective incentive mechanism.Finally, the governance structure of China’s private listed companies had the following impact on the occurrence of earnings management:ownership concentration had a U-shaped relationship with earnings management; equity balance degree had a positive relationship with earnings management; management positions change was positively correlated to earnings management; independent directors ratio、 meeting frequency of Supervisors Board and managerial ownership had no significant relationship with earnings management.According to the paper conclusions, I believed that it’s necessary to improve the governance structure of private listed companies. It not only effectively curbed the occurrence of earnings management, but also provided a guarantee for the company’s long-term health development. Therefore, the author proposed the corresponding improvement measures from internal and external environment.From the internal environment, the private listed companies should make improvements from four aspects. Firstly, the company should optimize the equity structure and improve the equity balance degree; Secondly, the company should strengthen the independence and effectiveness of the Director Board; Thirdly, the company should clearly oversight the functions of the Supervisors Board; Fourthly, the company should improve the incentive mechanism of the management.From the external environment, I made three recommendations to the relevant departments. Firstly, the SFC should improve the legal protection system; Secondly, the government should cultivate the manager market; Thirdly, the SFC should increase the capital market supervision.Through this research, I thought the highlights of this paper were mainly in the following areas:First of all, the object had a certain uniqueness. Secondly, the content of the study was more specific.Again, the model estimation was more reasonable.Finally, the analysis was more comprehensive.However, there were many limitations in this paper. By analyzing these limitations, I also realized the directions of further research:Firstly, the content was with a certain narrow-mindedness. Private listed companies is only part of the private enterprises. In order to discussed private enterprises better, in further studies, it should consider the non-listed private companies.Secondlv. the rationality of the variable needed to be elaborated further. It was not sure that the selected variables was reasonable. In the next step, I should focus on further selection of variables.Again, the applicability of earnings management’s econometric models needed to be studied further. It’s necessary to carry out further tests in whether the measurement model is suitable for China’s private listed companies.Then, the theme of study was not comprehensive. This paper focused on the topic about "governance structure influenced earnings management".In the further research, I should put more attention on "earnings management influenced governance structure".Finally, the usefulness of the suggestions needed to be considered. In the next research, I should study the practicality of the operating results.