Institutional Ownership And Real Earnings Management

Institutional investors is the important subject in the capital market. 2000, CSRC proposed ultra conventional development institutional investors as a means to improve the capital market. Institutional investors have talent, financial and Technological advantage. 2006, Commission promulgated the “governance criterion of Chinese listed companies”. Commission also pointed out that institutional investors should play a role in corporate governance. If institutional investors can actively participate in the management activities of the company, it can further protect the interests of other small and medium investors.So whether institutional investors are actively supervising the business activities of the company has become a hot spot in the academic research. But most of the research is defined as the general definition of institutional investors and Most of the studies focused on accrual earnings management. Institutional investors should include the general legal person. General legal institutions have become the important part of institutional investors, so this paper define the overall institutional investors as financial institutions and general corporate investors. Since the promulgation of the new accounting standards in 2006, the space of accrual earnings management is getting smaller and smaller, and more and more researches focus on earnings management. In this paper, we choose the 2012-2014 A shares of the listing corporation as a sample to explore the relationship between the financial institutions, the general legal person investors and real activity earnings management of the three, and consider the impact of financial institution investors and real earnings management in the case of general legal person investors.The research conclusions are as follows:(1) Overall institutional investors have suppressed the real activity earnings management behavior of the listing Corporation;(2) Independent financial institutional investors are actively involved in corporate governance and significantly inhibit the real activity of the listing Corporation, the non independent financial institution investors did not significantly inhibit the real activity of the listing corporation and the different control projects have different effects. General corporate investors with different types of real earnings management relationship is not consistent, the higher the proportion of the general legal person, the higher the actual sales control, the lower the cost and production control. General legal institutions to promote the actual sale of the control level, but will inhibit the abnormal cost and production control. At the same time, the proportion of general corporate ownership has little influence on the investors of independent financial institutions, which is mainly reflected in the sales control.As a whole, the contribution of this paper mainly on the following two points:(1) Previous scholars’ research rarely involves the general legal person investors, this paper defines the institutional investors as financial institutional investors and general corporate investors, and comprehensively examines the relationship between different types of institutional investors and real activities earnings management. Further study the relationship between different types of financial institutions and real earnings management, which makes the research conclusions of this paper have more practical significance;(2) Past studies on institutional investors and earnings management are mainly from the overall level of earnings management. This paper focuses on the relationship between institutional ownership and sales manipulation. In the past, the study on the relationship between institutional ownership and earnings management has been affected by the inherent problems. This paper chooses the real earnings management as the research object, because of the hidden nature of real earnings management, to some extent, reduce the endogenous problem, which makes the conclusion more reliable.