Accounting Standards, Capital Market Regulation Rules And Earnings Management

The financial crisis triggered by the sub-prime mortgage swept over the w orld in 2008.Market crumbling,stock plummeting,well-known investment bank bankrupting, the world is in chaos and strongly shocked.No one is prepared or foreseen this crisis. Why there is such a big problem undermine the thriving c apital market while nobody smells out the danger? The anger inspired the “O WS”.Regulation of capital market was blamed and criticized by the masses.In fact,strengthening regulation and innovation in the pursuit of profit has come a long way.If any party fail,the market will be swallowed by the imbalance.Appe ared in the late 1980 s,earnings management grow to the hottest topics as its close relationship to the regulation and investor interest protection.In this pape r,by establishing the LOGIT regression module to analysis the impact of earni ngs management from three changes of debt reorganization principles and bo nds regulation’s repeatedly amendment,it is showed that accounting principles’ repetitious revise has hardly controlled earning management but only change the means and form of it.It’s not the accounting standards changing but the re gulatory on capital market that affected the earning management. The fundam ental cause of earning management is that listed companies’ main shareholde rs and management conspire the earning management to cater the bond regu lation rules to protect the companies’ shell resources and some other stockhol ders’(especially small stockholders) interest.Therefor, we need to improve the bond regulation rules to restrict earning management and coordinate main sto ckholders’ interest.All the statistics are from GTA Data Base and related financ ial website which ensure the reliability of the conclusion. This paper has provid ed guidance for bonding investor to protect their interest. Also by the research of earning management in debt financing, we can find the features of it and h elp us to solve the problem. Most research are focused on how to improve th e regulation to restrict the earning management.By analyzing the research of western and eastern professionals, it’s very clear that we have to find the fund amental cause of this.And we can confirm that repetitious revise is not the onl y way to limit the earning management.The first contribution of this paper is th at it clarifies the connection between accounting standards and earning mana gement. Second is that based on the triple change in debt restructuring, the p aper work out the conclusion of regulatory is the main control. I also correct some misunderstanding and reach out some conclusion based on the research.And here are the solutions from the paper: 1, strengthen the prediction of mar keting trend and take according measures; 2, balance the flexibility between marketing vitality and regulatory;3,improve fair value and restrain earning management;4, complete internal management mechanism;5, establish long-term efficient capital marketing mechanism.What’s more,if w e want to achieve that we need more comprehensive efforts from much more aspects.Of course we have to confirm the importance of in-time revise of the p rinciples.But from now on we need a new view to rethink of all this.