Study On Earnings Management Of Chinese Listing Corporation And Its Impact On The Stock Price Crash

The ownership and control in modern enterprises separate gradually.So the actual operator of the enterprise is not the company's shareholders,which may lead to the operators do not attach great importance to corporate interests.In this case,the equity incentive emerge as the enterprise's require,which is a good solution to which the enterprise managers ignore the interests of the corporate.But it also result to another problem.The corporate managers conduct earnings management in order to share the interest when its stock price rise.corporate managers engage in earnings management of the enterprise to enable their corporate to meet the market's expectations.And the stock price will rise steadily accordingly.It is easy to understand.But in recent years,there are many scholars found that corporate executives' motivation of earnings management is to maximize their own profit,and they would hide the bad news of their corporate business.When bad news accumulated to a certain extent,it will broke out.Then the stock price will plummet.But the slump in the stock price will not only cause losses to investors,but also affect the confidence of investors,and then will have a certain influence to the stability of the market.On basis of all the above,the target of this article is to study the earnings management of corporates,and whether or not it will directly lead to the collapse of the stock price.Measurement of the accrual earnings management and the real earnings management are used in this paper.While the accrual earnings management has been studied thoroughly,and the real earnings management has been developed recently.The comparision of the accrual earnings management and the real earnings management are conducted to find whether or not it will have a influence on the collapse of the stock price.To achieve this,the correlation test and multiple linear regression should be employed.Through the correlation test and multiple linear regression between the proxy of the earnings management and the proxy of the collapse of stock price,an interesting fact are found.The fact is that only the real earnings management activities indeed leads to a share price collapse risk,and the accrual earnings management activities do not significantly cause the collapse of the stock price.But in this process,we find that the accrual earnings management has positive value and negative value.Namely,some companies choose to make their profit higher than the actual one,while some companies will choose to make their accruals lower than the actual one.But only the stock price of companies who make their profit higher than the actual one will has a risk of collapse.So only if the value of accrual earnings management is positive,it should be used to study the relationship of earnings management and the share price collapse risk.So when the value of the accrual earnings management is negative,it is deleted from the study.After controlling for variables on behalf of stock characteristics and market factors,the real earnings management,the accrual earnings management and the stock price risk of collapse together with the frequency of share price felling sharply are analyzed by multiple linear regression.Finally,we find that the earnings management behavior of enterprises,both the accrual earnings management and real earnings management activities will affect the performance of the stock.And its shares fell more often than other enterprises' shares.The accrual earnings management has a greater influence of the frequency of share price felling sharply than the real earnings management activities,especially the earnings management making their profit higher.Specifically,this paper is divided into five chapters:The first chapter is the introduction part.The background of the earnings management and the collapse of stock price,the research situation at home and abroad,the significance of this study and the research methods,research content,innovation and deficiency of this paper are made a simple explanation in this part.The second chapter is the literature review part.This chapter is divided into two parts,respectively from the two aspects of the collapse in stock prices and earnings management.The earnings management activities are divided into the accrual earnings management activities and real earnings management activities.And then a detailed review of the current study are made from the two part respectively.The third chapter is a summary of the earnings management and the stock crash.First,the models of the earnings management and stock crash risk developed so far are made a simple introduction.Second,on the basis of the models reviewed before,the model we used in this paper are introduced,and the fact of how to design the variables are presented next.The fourth chapter is the empirical analysis of the earnings management and the collapse of stock price.This part is one of the most important chapter in this paper.The selection of the data,the structure of appropriate model,the calculation of variables,the preliminary analysis of variables and the multiple linear regression analysis of the model are made a detailed description in this part.On basis of all this,analysis of the regression results are made for the conclusion of this paper.Luckly,the conclusion is in line with our expectation.The fifth chapter is the conclusion and prospect part.The results of the above models are summarized in this part,and then the deficiencies and areas for further research are put forward.