Empirical Research On Earnings Management Of Commercial Banks In China

In recent years, there are all kinds of problems about the phenomenon of the quality of financial reporting information in our country. What causes these problems? In general, there are two reasons:one part is due to the violation of the laws and regulations in accounting system; and the other part is due to the earnings management conducted by the top managing personnel in these companies. What is earnings management? Earnings management is a behavior that the business managers choose the favorable accounting policies and trade planning, using professional judgment to change financial report, so as to mislead the stakeholders’ decisions on the basis of company operating performance, or influence the result of contract on the basis of the data of the financial statements.The accounting information distortion due to earnings management have concealed characters, which lead to all kinds of capital market participants did not pay enough attention to this, or lack of the ability of recognition. Therefore, the study of earnings management phenomena, help users of accounting information understand financial information accurately, and is conducive to the effective running of the capital market.In the empirical literature of the research of the earnings management, the sample will remove the banking industry. This is. because the financial industry belongs to the special industries. Financial enterprises is different from other industries in all aspects. For example in banking industry, as an industry of high liabilities, it is a very important part of the chain of the economy as a whole, and operation safety affects the entire market and the stability of economic order directly. Earnings management’ motivation and methods of the banking industry has its uniqueness. Therefore, commercial Banks will be more strictly regulated than other industries. On the other hand, the bank’s main business is different from general industry, banks gain profit mainly through interest spreads of deposit and loan, and accounting method and report item are very different. So the research method of general industries’earnings management does not apply to the bank industry.The main business and regulation in commercial banks are different from general enterprise. Whether do the commercial banks exist earnings management like other industries? This is a question worth exploring. If the earnings management phenomenon do exist in the commercial bank, what are the motivation of earnings management, what are the means of earnings management, what are the effect factors of earnings management. The research of commercial banks’earnings management can help improve the commercial banks’ operation and management level, improve the quality of investors investment decisions, improved regulation, improve the effectiveness of accounting standards. It has a positive theoretical and practical significance.In this paper, the model of empirical study choose specific accrual models, and mainly testifies the relationship between loan loss preparation and earnings management. Loans are the main assets in banks. When loan losses occur, the banks will need to set aside provisions for loan losses, to reflect the real condition of bank assets and earnings. Loan loss provision is one of important accrued items in banking industry. Previous studies have proved that managers use loan loss provision for earnings management. In2007China issued the new accounting standards. There are new rules of loan loss provision among the new accounting standards. Whether can commercial banks use loan loss provision to manage earnings. It is a problem worth studying.This article first reviews the domestic and foreign research achievements about earnings management, and introduces the relevant theories of earnings management, including definition, theoretical basis, motive, means, measurement model in five aspects. On the basis of this, the writer analyzes the special motivation, methods and influence factors of earnings management in commercial banks. According to the previous theoretical analysis, the writer puts forward the research hypothesis, and selects the main commercial banks from2007to2012in China, including16public commercial banks and95private commercial banks. I adopt the empirical method, and confirmed that the commercial bank exists the behavior of earnings management in our country, using loan loss preparation for profit smooth, and proved that the degree of earnings management in the public commercial banks is stronger than the private commercial banks. Finally, according to the research conclusion, I put forward policy suggestions, the lack of research and future research prospects.