The External Profit Pressure,managerial Entrenchment And Cash Flow Manipulation

Corporate cash flow information has important investment decision-making value for investors. In recent years, many domestic and foreign listed Corporation financial fraud events show that cash flow manipulation exists. Some executives manipulation of cash flow for kind the purpose.Cash flow manipulation will not only mislead the users,and even had a bad effect on the capital market. To manage cash flow manipulation need to deeply study the motives of cash flow manipulation.This paper based on the new perspective of managerial entrenchment, and full considering the capital market business expectations-- external profit pressure, to study the deep reasons and motives of the cash flow manipulation of listing Corporation in China, so as to provide a realistic basis for the effective management of cash flow manipulation.In this paper, the first part is the theoretical analysis of relationship of the external profit pressure, managerial entrenchment and cash flow manipulation.On the one hand, based on the theory of asymmetric information, considering the influence of external profit pressure on cash flow manipulation; On the other hand, based on the theory of managerial entrenchment, asymmetric information and incomplete contracting theory,considering the influence of managerial entrenchment on cash flow manipulation;Further, based on the upper echelons theory, considering the influence of external profit pressure and managerial entrenchment on cash flow manipulation. Secondly, based on the data of Sample Firms from 2012 to 2014, the empirical test is conducted on the external profit pressure, managerial entrenchment and cash flow manipulation.The empirical results show that:(1) the greater external profit pressure, the more serious cash flow manipulation;(2) the higher managerial entrenchment level, the more serious cash flow manipulation;(3) under external profit pressure, manager for the managerial entrenchment motivation cash flow manipulation more serious.The innovation of this paper lies in:(1) the included external profit pressure and managerial entrenchment into the research framework, from the new perspective study the effect of managers’ behavior on cash flow manipulation, revealing the deep-seated reasons of cash flow manipulation from listed company, in a certain extent to provide practical basis of cash flow manipulation.(2) Study the common influence of external profit pressure and managerial entrenchment on cash flow manipulation, to deepen and expand the existing research in the field.