Property Protection, Real Earnings Management And Corporate Investment Efficiency

Earnings management can be divided into accrual earnings management and real earnings management(Gunny, 2010). Among them, accrual earnings management usually only affects the distribution of corporate profit in the accounting period and not directly affect the cash flow, but the real activity earnings management will change the enterprise profit and affect the cash flow. With the promotion of market-oriented reform and the improvement of regulatory environment, more and more corporate will operate by manipulating the actual business activities in order to achieve specific earnings targets. Real activity earnings management involves the actual manipulation of transactions and business activities. it is difficult to separate from the normal trading activities and this behavior will not be limited by the accounting standards. Compared to the accrual earnings management, the real activity earnings management is not easy to be found. The stakeholders in the enterprise cannot identify the real activity earnings management, it is more likely to make wrong evaluation of investment project, and then generate excessive or insufficient investment.This article is based on unique system background in China, refer the existing research achievements, select 2011-2014 listed companies in China as the sample data for the study, and analyzes the economic consequences of listed company’s earnings management activities from the perspective of efficiency of investment sales control,production control, cost control, then examines if this effect has significant differences in different property protection areas. The study shows:(1) The phenomenon that in China listed companies manipulate real earnings management is widespread. And real earnings management and corporate Inefficient Investment significantly correlated. It indicates that real earnings management will affect the investment efficiency of enterprises. The higher real earnings management, the lower investment efficiency;(2)At the same time, in different property protection regions, the real earnings management’s influence on corporate investment efficiency is significant. Specifically,in a poor area of property protection, the real earnings management has greater negative impact on corporate investment efficiency. In this paper, the possible innovation point lies in : First, the current domestic research focuses on the accrued items earnings management, and the real activities earnings management research is still in itsbeginning stages. So we research the economic consequences of Real Earnings management from the angle of investment efficiency. It is benefited to us understanding the real earnings management behavior of the event, and has the guiding significance to reality.