A Research Of The Relativities Between Earnings Management And Corporate Governance

China’s stock market plays an increasingly important role in the national economy. However, earnings of listed companies manipulate market intensified in recent years, and it has seriously affected the fairness of the market and the efficient allocation of resources in the capital market, the investors’ benefits especially small investors’ were threaten seriously. In the mid 1980 s, the accounting and even foreign researchers began to study earnings management as an important research topic. With the improvement of China’s capital market and related legal system, earnings management has become the focus of attention to research. Previous studies show that reasonable corporate governance structure and a high level of corporate governance can limit the extent of earnings management effectively. However, as the external part of the mechanism of competition in the industry difference often by people ignore the degree of product market competition intensity can often influence the corporate governance level which influence.The on industry competition as the breakthrough point, Chinese listed companies according to the intensity of competition in the industry points for competition and monopoly are two major categories of classification and comparison study of, respectively, to study the relationship between the internal corporate governance structure and earnings management, analysis and comparison. The results show a lot. First, the internal corporate governance mechanisms can inhibit the extent of earnings management effectively; second, compared with the previous, the innovative point is that it was found differences based on industry competition, and the impact of corporate governance on earnings management has different, in other words, in terms of the impact on earnings management, industry competition for corporate governance mechanisms have a replaced complementary role. Specifically, in the competitive industry, there is have a significant negative correlation between the board size and earnings management, while in the monopoly industries there is no significant relationship between them; whether the chairman and general manager is the same person has no significant effect on earnings management, while in the monopoly industry, by different person as the board chairman and the general manager, it will have a significant inhibitory effect on earnings management; there is “U” relationship between the degree of earnings management and the ownership concentration degree in the industry competition, while the two indicators concentration have no significant relationship in the monopoly ownership. There were negative correlation between the proportion of management shareholding, managerial ownership and earnings management both in the competitive industries and the monopoly industries.Combined with the results of empirical research, this thesis gives some recommendations. Because competition in the industry differences exist among the different sectors of corporate governance mechanism, the effect of earnings management, corporate governance mechanisms should be adjusted according to the specific circumstances of the industry, in order to achieve the greatest degree of earnings management inhibiting, to reduce financial fraud, ensuring the healthy development of the market.