Research On Influence Of Independent Directors’ Reputation On Earnings Management

Since2001, China Securities Regulatory Commission issued 《The Guidance on the Establishment of the Independent Directors of listed companies》, the effectiveness of the independent director system has become a hot issue on high-profile academics. Introduction of independent directors can restrict the major shareholder to certain extent and protect the legitimate interests of minority shareholders, improving the Board of Directors and the corporate governance structure and mechanisms. Therefore, the role of independent directors playing in their company has an important impact on earnings management of listed companies constraint; the independent director’s system performance and the reputation of independent directors and plays a complementary. However, with the Commission’s supervision of listed companies continued to increase, more and more evidence indicates that, the use of control abnormal accruals earnings management is more difficult by selecting accounting policies; more companies turn into more subtle earnings management through manipulation, cost, production and other real trading activities. If reputation mechanism as independent directors playing an important role in protection functions, can have an impact on corporate real earnings management and accrual earnings management, has become an urgent problem to be solved.In this article, accruals manipulation of earnings management and real activities manipulation of earnings management were included into the analytical framework, included in the analysis, selecting2574sample data of listed companies in manufacturing in2010-2012as assessment of accrued earnings management and real earnings management activities of the foundation, company’s independent directors to serve all mean the sum of the number of other companies as an independent director reputation variables; also investigate different occupational backgrounds of independent directors (the "scholar" independent directors, the "accounting" independent directors) have different effects on corporate earnings management caused. By descriptive statistics, independent samples T-test, correlation analysis and multiple regression analysis, Listed Companies in China manufacturing enterprises affect the reputation of independent directors on corporate earnings management approach.The results showed that:(1)The reputation of independent directors (independent directors part-time) and both accrued earnings management and real earnings management are negatively correlated, that independent directors within the corporate reputation can effectively suppress enterprise earnings management. Meanwhile, the reputation of independent directors on the true extent of inhibition of earnings management is better than the corresponding gauge the degree of inhibition of earnings management.(2)The independent directors’ reputation with different professional backgrounds affect corporate earnings management differently. The proportion of "scholar" of independent directors is higher, the degree of inhibition can be effectively carried out within the corporate real earnings management activities; but the " scholar" independent directors on the accrued earnings management within the enterprise did not play a good inhibition; on the contrary,"proportion of accounting type" of independent directors is higher, the enterprise can be effectively suppressed accrued earnings management activities, but the inhibition of real earnings management activities with no significant correlation.(3) Independent directors’ education also affect earnings management activities within the enterprise; the higher the educational background of independent directors is, the more earnings management activities can effectively inhibited within the enterprise.