The Empirical Research On Earnings Management And Investment Efficiency Of The Listed Companies In China

Earnings management will affect the surplus of the report, so that the impact ofinformation users. Information users include not only the external stakeholders, butalso internal management. From the internal point of view,earnings managementexacerbate information asymmetry between management and shareholders. Themanagement for the motivation to maximize their own interests,break allshareholders’ rights, making investment decisions also will be affected. From theexternal capital markets point of view, earnings management distorts the externalsurplus, exacerbates asymmetric information between the enterprise and externalinvestors.It will lead to the increase in the cost of capital, affecting the financing ofenterprises, and ultimately affect the investment decisions of enterprises.To learn from the past research articles, the first general examine the extent ofearnings management on corporate investment efficiency. The research results showthat,the higher degree of earnings management, investment efficiency is lower. Andthe management to take measures to reduce the extent of earnings management caneffectively improve the efficiency of investment, more reasonable long-terminvestment, and enhance enterprise value.Modified Jones model calculated manipulation accrued profits there are positiveand negative points, the investment efficiency value is divided into over-investmentand under-investment, therefore, this article further classify all samples in accordancewith the model calculation of the values of positive and negative.Investigate theforward earnings management and over-investment and under-investment, as well asthe negative earnings management and over-investment and under-investmentrelationships, in order to refine the conclusions of the study, for listed companies toprovide more in line with the conclusions of their own situation. The results show:Firstly, the forward earnings management will aggravate the principal-agent problem,so that a deeper level of information asymmetry between shareholders andmanagers.Managers will excessive investment in order to expand the job consumption,increase in salary, set up a business empire purpose and so on; secondly, the forwardearnings management will reduce the quality of accounting information, thusexacerbating the adverse selection problem.Enterprises are faced with a higher cost ofcapital, a more serious problem of financing constraints, leading to a lack of businessinvestment.In the empirical testpart, I found slightly positive earnings management and under-investment level correlation coefficient is positive, indicating a slightlypositive earnings management can to some extent alleviate the lack of businessinvestment, althrongh don’t took through the test of significance.For the future studyof earnings management governance,it means providing a good entry point;thirdly,enterprise negative earnings management’s motives is to smooth income motivation,tax motivation and the huge charge-offs motivation. Negative earnings managementfor smoothing income and tax motives,enterprises will not adopt the means of foreigninvestment.Because foreign investment is vulnerable to regulatory authorities andexternal investor’s concern, and corporate earnings management behavior is easy tobe aware of.So negative earnings management and over-investment there is nocorrelation; while negative earnings management for the huge charge-offs motive, thecorporate accounting means to enable enterprises turn, companies can not pay the costof fund-raising required, resulting in a lack of business investment.