Earnings Management Under The Influence Of Internal Governance

Earnings are an important indicator of profitability of the company. Enterprise managers, shareholders, investors and other stakeholders are very concerned about the accounting earnings. However, in recent years the prevalence of domestic listed companies earnings manipulation. Earnings manipulation leads to lower quality of accounting information, harm the interests of small investors. The corporate governance is composed by shareholders, senior management, the board of supervisors. It is aninternal mechanism about relationship of checks and balances. Corporate governance is essential to supervise and inhibit the earnings management behavior. So explore internal corporate governance impact on earnings management what is the theory about further improving the internal governance mechanisms and the quality of earnings management.Firstly, this study card the literature from connotation of earnings management, existence and the correlation of earnings management and corporate governance. Exploring the theoretical basis and analyzing of the impact mechanism to provide theoretical guidance for empirical research. Secondly, The BD method used in real earnings management issues exist empirical research form avoiding loss, keeping earning increasing, meeting analyst’s earning forecast three threshold angle. Finally, on the basis of verifying the existence of earnings management.Proposing the correlation assumptions between corporate governance and earnings management by the theoretical analysis. And then, establishing the multiple regression model. Delving into the company’s internal governance impact on accrual-based and real activities earnings management from ownership structure, board of directors’characteristics, mechanism of excitation which included in the company’s internal governance. Putting forward the proposal about how to further improve the internal governance mechanisms and quality earnings for listed companies.This thesis concluding the following conclusions by empirical research. In terms of the existence of earnings management, this paper argues that the prevalence of earnings management behavior of listed companies to avoid loss and keep earning increasing. Meeting analyst’s earning forecast is not the important thresholds of earnings management. In terms of corporate governance impact on earnings management, the study result the following conclusions.(1)Ownership concentration and state holding have the positive correlation between earnings management. Both play the promotive role of real earnings management more significant than accrual-based earnings management. (2)Expanding the size of the board of directors and increasing the proportion of independent directors which can effectively suppress accrual-based earnings management behavior. For real earnings management is not strong oversight role. Increasing the establishment of the commission’s number does not improve the quality of accrual-based earnings management and promote real earnings management behavior. Separation of chairman and CEO can effectively suppress accrual-based and real activities earnings management (3)The board shares can improve earnings quality and more significant regulatory role for real earnings management. Executive compensation is one of the motives of management earnings management. To a certain extent it promotes the earnings management behavior.