Can The Csrc Punishments Inhibit The Earnings Management Behavior Of Listed Companies?

In recent years,a lot of research has shown that listed companies would manage its earnings in China.In practice,listed companies may use a variety of ways to control its earnings,such as non-recurring profit and loss,accrual-based earnings management and real earnings management.A large scale of earnings management would impair the authenticity of listed companies' financial reports,reduce the quality of accounting information,and damage the interests of investors,decrease the allocation efficiency of scarce resources in the security market.According to the law in China,the China securities regulatory commission(CSRC)shall exercise the supervisory power of the government to the securities market in accordance with the law.In view of the universality and harmfulness of earnings management,the CSRC should continue to regulate earnings management in listed companies.In the process of the regulation,the CSRC can regulate the securities market by inspecting,investigating and auditing,at the same time give administrative punishment for illegal behavior in the securities market according to relevant investigation results and corresponding laws to keep it in order.Because of different concealment and methods to control the earnings,the CSRC pays different attentions to different ways of earnings management.Therefore,there are some differences in the regulation degree for different ways of earnings management.Under the regulation environment in China,the imperfect securities regulation system and lack of regulation of the regulation department cause a large number of illegal phenomena in the securities market,damaging the interests of investors and decreasing the efficiency of the securities market.In this paper,empirical and case study are used to study the efficiency of the CSRC regulation for earnings management.In the empirical analysis,this paper takes listed companies from 2006 to 2013 as samples,and uses different earnings management models to estimate the earnings management level of sample firms.In the case analysis,this paper takes an example of Far East Industrial Co.,Ltd punished by the CSRC to research regulation efficiency of earnings management by analyzing the motivation of the company's earnings management,specific performance on earnings management and the change of the company's earnings management ways before and after the CSRC punishment.The study finds that the CSRC punishment does not reduce the company's total earnings management level and that after the CSRC punishment the company turns to real earnings management.In order to improve the regulation efficiency of earnings management,this paper puts forward some policy suggestions.First,the CSRC should increase the penalties for earnings management of listed companies.Second,the CSRC should strengthen regulation for real earnings management.The research of this paper is of great significance to improve the regulation efficiency of earnings management,increase the quality of listed companies' financial reports and enhance the role of the securities market in the allocation of resources.