The Research On Governance Of Debt Financing For Earnings Management

Corporate governance has been a hot topic for long time. The theoretical research and the empirical research of corporate governance can be divided into two parts. One emphasizes the company’s internal management. The other part emphasizes the external market mechanism. The researches of internal governance mechanism are very abundant. Some are about the researches of the relationship between the internal governance mechanism and earnings management. For the external governance mechanism, the markets of managers, marketization and debt capital market are the hot topics.Our country is in transition period at present and market economy is not developed. The rights-offerings of the stock market have a certain limit. But at the other side, out country hold a huge bank system and the bond market with huge development space. So debt financing will play a more active and more important role. The research on the corporate governance of debt financing is practically meaningful for creditors to play governance role better and to protect their assets security.But considering our country’s real economic environment, does the debt financing have the governance effect on the companies? If it has, then how does the corporate governance effect? These questions are worth thinking and researching. This paper is going to discuss about it from the perspective of earnings management and to observe the corporate governance of debt financing in the real economic environment of our country.This paper is divided into six parts, the main contents of each part is as follows:Chapter1is the introduction. This part will introduce the background and the significance of the research, and then introduce the method, the framework.Chapter2is the literature review of the governance of debt financing and earnings management. Chapter3is the theory basis of the governance effect of debt financing on earnings management. The theory basis includes the capital structure theory, the principal-agent theory and the signaling theory.Chapter4is the design of research on the governance effect of the debt financing on earnings management. This part will establish the model and explain the variables and the standard of sample selection..Chapter5is the empirical results and analysis.Chapter6is research conclusion. The main conclusions are as follows:(1) The governance effect of debt financing on earnings management will be different because of the different debt term structure. Short-term debt have the governance effect of debt financing on earnings management, but the governance effect of long-term debt on earnings management is ambiguous.(2) The governance effect of debt financing on earnings management will be different because of the different state. Compared with the state-owned enterprises, the governance effect of debt financing of non-state owned enterprise on earnings management will avianize.(3) The governance effect of debt financing on earnings management of different directions will be different. Compared with positive earnings management, The governance effect of debt financing on negative earnings management will be avianize and even disappear.