The Effect Of Ownership Structure On Real Earnings Management Of China’s Listed Manufacturing Firms

As foundation of modern corporate governance, ownership structure directly affects the equilibrium of different stockholders, and subsequently their behavior mode, and finally the future of the firm. However researchers ponder differently on which is better ownership structure. Earnings management reflects the procedure and result of gaming among stakeholders in the macro environment of capital market and in the micro structure of firms. The game is affected by various factors. Real Earnings Management succeeds the supervision of accounting standards, and is more intangible and harmful to firms, so it is getting more attention, although in recent years researchers began to focus on which, relevant studies are rather rare. Considering the inherent relation between Real Earnings Management and ownership structure, we should be strict on firms from the perspective of internal corporate governance as well as external methods such as law system, to restrain listed companies’ activities and to safeguard the benefit of stakeholders.This dissertation uses empirical study method to analyze affecting of ownership structure to Real Earnings Management, selecting the largest shareholders’ share, non-controlling big holders’ share, stockholder property, management’s share and institutional investors’ share as proxy of ownership structure, and puts forward corresponding suggestions.The result shows that there is an inverse U-shape relation between Real Earnings Management and two factors (the largest shareholders’ share and the institutional investors’ share), and there’s an inverse relation between Real Earnings Management and large shareholders’ share. Management’s share has no statistical relation with Real Earnings Management, probably due to the low percentage share of whom. The dissertation also finds Real Earnings Management is more severe in state controlling firms than in private firms. These conclusions are of value in extending academic field of both corporate governance and earnings management, and are likely to contribute to restraining earnings management and realizing excellent corporate governance.