Sponsored Brokerage Reputation, Institutional Investor Holdings And Earnings Management

Many company listed in the new three board grow quickly,small and medium-sized enterprises want to seek financing and expansion in recent years.These companies generally have a high and new technology,still in its early stage of the development,the enterprises don't have standard operation consciousness,don't form a stable profit model and have poor quality of accounting information.Many companies attempt to manipulate profit to highlight the financial performance by the means of earnings management,so the risk of investment in the new three board is higher.As a financing platform for small and medium-sized enterprises,standardizing the management,improving accounting information and restraining earnings management can protect the lawful rights and interests of investors,what mechanism can suppress the degree of earnings management?Reputation as a sort of intangible assets,once it was damaged,it was difficult to restore,in the process of due diligence and continuous supervision,the host brokers with higher reputation will be more dedicated to perform its duties,regulating the behavior of earnings management of listed companies.According to the theory of active institutional shareholder,investors take part in the corporate governance,perform their supervisory duty and restrain earnings management.Using the listed companies in the new three board as research samples in 2014,empirical tests show that the relationship between reputation of host brokers,institutional investors and earnings management for the previous year,that year,year after the listing.This empirical results show that:(1)The broker reputation and institutional investors can inhibit earnings management.(2)The institutional investors hold more time,they can effectively retain earnings management.(3)The amount of institutional investors can restrain |da|.(4)When there exit institutional investors,they can improve the effect of reputation of host brokers.This paper,the empirical results show that during the period of company listed in new three board,differentgovernment mechanism play different role in regulation.In this paper,the research provides a theoretical basis for inhibition mechanism of earnings management before and after the company listed in the new three board.At the same time,besides laws and regulations,using the market's invisible hands.Host brokers and institutional investor can actively cooperate with each other,participate in corporate governance,restrain earnings management and standardize the healthy development of the new three board market.