Equity Concentration,Equity Restriction And Real Activities Manipulation

In the modern enterprise system, the separation of ownership and management leads to the principal-agent relationship, and the manager who is in the company also has the obvious advantage in terms of information, therefore for some purpose the manager will have the ability and motivation to conduct earnings management. Earnings management is a kind of behavior that the manager used the accounting method or arrange real transaction to change financial report, then they could mislead stakeholders understand the performance of the company or influence the contract that is based on the report earnings. Listing corporation tends to use the earnings manipulation to achieve their aims, such as packaging market, avoiding delisting and rights, additional issuing new shares. The abuse of earnings management affects the interests of investors who use accounting information for investment decisions, weakens the allocation of capital market resources, even it could disturb the normal operation of the capital market. the reason of earnings management and its important effect is derived from the company’s internal governance issues. Ownership structure is the foundation of the corporate governance, and as part of the equity structure of the company, can be said that the ownership concentration and ownership balance degree of earnings management and listing Corporation have close relationship.Although since90’s of last century, China’s capital market gradually rise and flourish, but because of China’s capital market itself has some defects, the listing Corporation of ownership concentration, ownership balancing degree is low is a significant feature of the present situation China listing Corporation governance. All these problems will intensify the earnings management behavior of listing Corporation, so the ownership concentration, ownership balancing degree for China’s listing Corporation real activities earnings management is of great significance. Studies have shown that, in reality, the listing Corporation to implement the behavior of earnings management is no longer just rely on the project should be manipulated profits, to modify the accounting information real earnings management activities to choose more and more companies, including a price discount or the relaxation of credit conditions operating sales revenue, reduce discretionary expenditure and excessive production to reduce the unit cost of the product. Methods, these methods are generally has strong concealment. But most of the current research on the ownership structure and earnings management is concentrated from the angle of project accrual earnings management, and is the research on ownership concentration influence on earnings management.The theoretical part of this paper mainly from the earnings management, real activities earnings management, ownership concentration and equity balance degree of these four aspects, and effect of concentration degree,ownership balancing degree of these two aspects and real activities earnings management relationship described in detail from the ownership, this article put forward the research hypothesis. The empirical part, this paper in2012in Shanghai and Shenzhen two city all A shares of listing Corporation as the research object.the main conclusion as follows:the suspect firms operating year showed lower operating cash flow and lower discretionary expenses, has adjustable high profit trend; the proportion of the first shareholder and real activities earnings management degree is U relationship; equity balance degree and real activities earnings management is U relationship. These conclusions valid proof of ownership concentration, ownership balancing degree is an important factor affecting China’s listing Corporation real activities earnings management.