Theory And Empirical Research About Impact Of Earnings Management On Business Performance

All along, earnings management has been a topic of wide concern in the field of accounting, whichproduced in the separation of corporate ownership and management. Along with economic development,earnings management practices also transformed. Due to the impact of accounting earnings information onmany stakeholders, such as governments, regulators, investors and so on, theorists also followed the pace ofpractice to study earnings management constantly. Since the beginning of the eighties of last century, theaccounting academic research on earnings management has made great progress. Research on motivation forearnings management, influencing factors, methods and their mutual influence are quite mature. Alsoempirical studies of earnings management had not only a profound impact on accounting practices and theformulation of generally accepted accounting principles, but also greatly contributed to modern accountingtheory and research methods development. However, there is a big difference in the empirical studies of avariety of earnings management subsequent impact on business results. In this respect, the paper carried outsome exploration and demonstration of earnings management on firm performance.Firstly, the paper combed domestic and foreign earnings management and corporate performanceresearch literature, to understand the current status of the research field; followed by the paper theoreticallyanalyzed earnings management and business performance. Earnings management mainly elaborated from itsconcepts, classifications, determinants and correlation analysis between them; enterprise performance wasdiscussed mainly from its conception, development and measurement indicators; then the impact on businessperformance earnings management theoretical analysis section, respectively, from accruals earningsmanagement and real earnings management activities, and proposed underlying assumptions; addition theempirical research component, respectively, from the selection of the data to identify metrics, modelconstruction and empirical analysis of the results; Finally, it proposed the conclusions and policyrecommendations.In this paper, by empirical research we obtained the following conclusions: accrual earningsmanagement has a positive impact on firm performance, while real earnings management activities has anegative impact on business performance. In our particular market environment, under the influence of state-controlled, ten auditing, financial leverage and the independence of directors and supervisors willprompted companies to tend to select real earnings management activities. Based on these conclusions, thearticle puts forward some corresponding policy recommendations.