The Study Of Relationship Between The Reputation Of Institutional Investors And Earnings Management

Earnings Management Behavior cannot objectively and fairly reflect the operating performance of listed companies, which even mislead stakeholders as well as the relevant government department policy decisions and then seriously influence on the effective configuration of social resources. So it is a subject that how to effectively curb the listed companies’earnings management behavior of management or level down the degree of earnings management to an acceptable low level gradually.As the backbone of the market, institutional investors with a strong information gathering, analysis and processing ability in China have been rapidly developed in recent years, which play an important role in corporate governance. In recent years, however, the researches of institutional investors have been concerned on the theory instead of empirical research of intangible assets. Therefore, this article will begin with institutional investors’reputation; focus on the influence of the static state of reputation of institutional investors on the balance sheet date and the dynamically change of institutional investors on the accrued earnings management and the real earnings management of listed company.This paper is divided into six chapters:the first chapter is the introduction, which mainly introduced the research background and significance; The second chapter reviews the previous research study of institutional investors and earnings management, as well as the relationship among institutional investors, Accrued Earnings Management and Real Earnings Management; The third chapter puts forward the theoretical basis, which runs through the full text, including reputation theory, Stakeholder theory, principal-agent theory and information asymmetry theory and also design a model involved in the relationship between the reputation of institutional investors and earnings management; The fourth chapter of this article introduces samples and data, and puts forward the research hypothesis, and constructs empirical model as well; The fifth chapter involves in the empirical model regression and analysis; The sixth chapter puts forward the research conclusion, policy advice, innovations and research prospects.Finally, this paper concludes that institutional investors have negative correlation relationship between reputation and earnings management. And this negative correlation relationship is much more obvious when examining the superior institutional investors in fluctuation than when examining the static state of reputation of institutional investors on the balance sheet date. On the other hand, when it comes to the comparison of the number of superior institutional investors in the top 10 shareholders of listed companies and the issue of whether it exists superior institutional investors on balance sheet date, it tends that the latter has much more obvious influence on earnings management. In addition, respectively for accrued earnings management and real earnings management, whatever the static characteristics of the reputation of institutional investors or the change of the shareholding of superior institutional investors, it appears different between accrued earnings management and real earnings management, or even gets contrary conclusion. Thus, this paper argues that the reputation of institutional investors have different influence on accrued earnings management and real earnings management, even there is a substitute relationship between them.