Research On Real Earnings Management Of Listed Companies

Earnings management is a systematic process which is completed by businessmanagers based on special motivations and taking special methods to adjust externaldisclosure of accounting information. Earnings management can be divided intoaccruals management and real earnings management, according to different methodsof implementation. For a long time, researchers think that accruals managementcompared with real earnings management takes low cost to operate. So, accrualsmanagement becomes the mainstream of earnings management study. However, theeconomic and social situation, especially the accounting environment has beenchanging. Such as the United States in2002enacted the Sarbanes-Oxley, and in2006China enacted the new corporate accounting standards, which have taken direct effecton earnings management. Some surveys found that under the new accountingenvironment, business managers tend to utilize real earnings management rather thanthe traditional accruals management. Based on current research direction of earningsmanagement separates with accounting practice, this paper choose real earningsmanagement as research object.At the beginning, the paper introduces comprehensively and detailed aboutcurrent situation of the domestic and foreign earnings management research, whichexplains the urgency and necessity of research on real earnings management. At thesame time, the paper makes detailed explanation on research ideas, methods, purpose,significance and so on. Taking these as a basis, the specific research begins. First ofall, the paper analyzes the mechanisms of real earnings management, includinginternal cause, motives, means, constituting the theoretical basis of this paper, whichindicates the existence of real earnings management and its process in theory.Secondly, depending on theoretical analysis, the paper selects the debt restructuring asa starting point. Then, the paper utilizing the financial data of the A-share listedcompanies of China in2008, from an empirical point of view, verifies that the smallprofit of sample companies in2008avoided loss by debt restructuring. Namely, the real earnings management exists in listed companies of China. Further more, thepaper from both positive and negative effects analyzes the economic consequences ofreal earnings management as the economic behavior implemented by the businessmanagers. The paper takes nineteen debt restructuring companies as example, provingformer analysis. According to these, the paper suggests that moderate real earningsmanagement as a sign of mature business, can be accepted by stakeholders. Excessivereal earnings management will harm corporate and its stakeholders. Finally, in orderto prevent the occurrence of excessive real earnings management, the paper putsforward seven measures according to the mechanism of real earnings managementand other influencing factors. After these, a relatively complete real earningsmanagement system is formed, which is useful to comprehensively understand andgrasp all aspects of real earnings management.Both researchers and stakeholders should be aware that real earningsmanagement can not be eliminated by measures, due to asymmetric information andlimited rational person always being. Thus, the real earnings management can noteradicate from their roots, coupled with other control measures can only be relativelyeffective and can not absolutely perfect. In addition, the moderate, reasonable realearnings management is necessary to corporations. Therefore, the true role of themeasures is to harvest the moderate, reasonable and acceptable real earningsmanagement and prevent the real earnings management from disordering, in order toensure the healthy development of capital markets and protect interests of investors.