Empirical Analysis Of Governance Effect Of Margin Trading Under Earnings Management Perspective

As western countries start to study margin trading earlier,the foreign academic circles have formed a relatively complete theory through continuous exploration,innovation and improvement.Most findings suggest that margin trading not only can affect the transmission of information which will further lead to improve the pricing efficiency of the security market and the fluctuation of the stock price,but also can influence the operation and management of the company which can result in the improvement of the operation efficiency and profit in listed companies.However,due to the lagged-behind beginning of margin trading in China,domestic academic circles rarely focus on the research of margin trading which leads to a relatively small amount of research papers.Moreover,the research mainly concentrates on the consequences caused by margin trading from the macro aspect.Only few research will target on the micro aspect and study the effects that margin trading brings to the listed companies' behavior.Due to the special domestic institutional background,the permission of margin trading will have an important impact on the development of China's capital market.Studies have shown that in the presence of margin trading,the relevant regulation department and investors will pay more attention to the disclose financial information in listed companies,which will no doubt lead to the rising cost of profit manipulation for those top management teams in listed companies.At the same time,because of the relatively high threshold of margin trading in this stage,institutional investors have become the major players in margin trading.However,given the professional skills as well as profit-driven characteristics of the institutional investors,they are more motivated and willingly to dig the business-related inside stories,especially the bad news which will magnify the impact on listed companies through the margin trading leverage.Thus,the cost for profit manipulation will further increase.Apparently margin trading will curb the top management teams' behaviors of earnings management to a certain degree.Therefore,based on the analytical logistics,this article will continue to do the empirical analysis so as to observe the influence that margin trading brings to the corporate behaviors from a micro aspect.Under the perspective of corporate governance,this paper studies the effects of margin trading on the earnings management behavior and the ownership structure of the company's role played in the effects using the empirical analysis method.This paper is put into the following six sections:The first part is the introduction.This part of the paper mainly describes the background,significance,research framework,research methods and innovations.The second part is the literature review.This part focuses on the research results related to margin trading at home and abroad along with the author's review.The third part is the theoretical analysis and research hypothesis.Based on some of the major literature review,this part analyzes the relationship between margin trading and earnings management,and considers the impact of the ownership structure.Then it puts forward several relevant assumptions.The fourth part is the empirical model.This part firstly elaborates the standard of sample selection and the sources of relevant data.Secondly it describes the definitions of variables and the designs of empirical models in details.The fifth part is the empirical results and the test results.This section describes the empirical analysis through descriptive statistics,correlation and regression testing to verify the correctness of assumptions related to this paper.The sixth part is robust test portion.This part does the re-regression analysis of previous three hypothesis by changing the measurement of earnings management,which will exclude the occasion resulted from using a single measure of earnings management to bring the chance and verify the correctness of assumptions again so as to enhance the credibility.The seventh part is the research summary and some suggestions.This portion firstly summarizes the results of this study,followed by the related suggestions to perfect domestic margin trading system based on empirical analysis under the perspective of corporate governance.According to the empirical analysis,we find that:(1)After the introduction of margin trading,the top management teams' behavior of earnings management will be curbed in listed companies for which stocks involves.As a result,the earnings management level appears obvious decline.(2)The equity structure can affect the influence that margin trading brings to earnings management to some extent.Compared with those listed companies which has balanced equity structure,the governance effect of margin trading will play a greater role in the listed companies with unbalanced equity structure.(3)The nature of equity will also affect the governance effect of margin trading to some extent.When listed companies have balanced equity structure,compared to non-state enterprises,the governance effect of margin trading will play a greater role in state-owned enterprises;while the equity structure of listed companies is unbalanced,the governance effect of margin trading still play a greater role in state-owned enterprises than in non-state companies.Given the situation that margin trading starts later in China,the research on the effect results in the changes of corporate behavior under the perspective of corporate governance is still a relatively new field in domestic academic circle.This paper combines the margin trading and equity structure of listed companies to analyze comparatively how the governance effect that margin trading brings to earnings management changes under two situations.One is about the balance situation of equity structure and the other is about the nature of equity in the listed companies.In this paper,our view is relatively new,which will not only enrich relevant research literature but also provide new empirical evidence for the implementation of the academic study of the effect of margin trading.