Research On Earnings Management And Corporate Governance Of Chinese Listed Company: Based On Empirical Test And Game Theory Analysis

With the prosperity of global economy, our capital marketexperiences unceasing development and improvement. However,earnings management of listed companies has become more serious dueto global economic crisis led by US subprime mortgage crisis now days.This has become the focus of attention of academics, practitioners,regulators and investors.This paper follows the path of actual operating activities of listedcompanies：behaviour analysis of earnings management; identificationof earnings management; governance of earnings management. Icombined theoretical analysis and empirical test in this paper. To startwith basic theory, I went through some concepts of earnings managementand corporate governance, and further discussed their relationship. Inorder to fully analyze the role of earnings management stakeholders,regulators, audit institutions, small and medium investors in earningsmanagement of listed companies, I constructed game theory matrix andgame theory analysis. Finally I conducted empirical test of earnings management and corporate governance by applying financial data of1567listed companies in2011. I found auditing fee and ownershipconcentration is positively correlated with the level of earningsmanagement; proportion of circulated shares is negatively correlated withthe level of earnings management; the number of exclusive ownership ormanagement compensation is not significantly correlated with the level ofearnings management.Earnings management is the problem of many countries and hottopic in capital market. This paper firstly analyzed game theory model ofearnings management stakeholders of listed companies, and discussed theinfluence of earnings management behavior by empirical test. This willaccelerate the improvement of the generally accepted accountingprinciples (GAAP) in China, attach great importance to auditing,strengthen supervision and punishment mechanism, and promote thedevelopment of modern accounting theory.