Research On Institutional Investors' Shareholding And Earnings Management Under The Control Of Large Shareholders

In October 2009,China's GEM market officially opened,the GEM gate means that China's capital market has entered a new stage.The GEM as a supplement to the motherboard,it not only for our small and medium enterprises to provide a good financing platform for those who have good prospects for development and ideas but no sufficient funds for the rapid development,but also contribute to China's capital market Multi-level development.Compared with the motherboard market,the GEM listed on the standard is much lower,small-scale enterprises,two roles is more serious,prone to insider control and other issues,making the GEM listed companies are more prone to the phenomenon of earnings management.Earnings management is a kind of behavior that management considers to be human intervention for the purpose of self-interest.This kind of behavior violates the real and objective principles in accounting standards,reduces the authenticity and reliability of the financial information of the company and seriously misleads the investment,Creditors and other stakeholders of the decision-making behavior,making the effective allocation of social resources greatly reduced.Since earnings management is mainly caused by "information asymmetry" and "incomplete contract" in principal-agent theory,it is difficult to find a way to completely circumvent earnings management behavior,and how effective suppression of earnings management become a hot issue for the shareholders and scholars.In recent years,institutional investors have developed rapidly in China,has become the new force of China's capital market,institutional investors as a third force between large shareholders and individual investors,compared with individual investors with investment scale advantage,talent advantage,information advantage and certain rationality,but do not have the absolute controlling shareholders caused by the lack of supervision,so in the process of participating in corporate governance should be able to play a balancing role and supervision,so as to bring the positive governance role to restrain earnings management.But the majority of institutional investors can play a positive role in corporate governance?the problem seems to be no consistent conclusion.Some scholars believe that some speculative institutional investors can not play a positive role,but together with the company's management against the interests of small and medium shareholders,especially in the case of high concentration of equity,institutional investors is difficult to large Shareholders to implement checks and balances,for their own interests,institutional investors may be together with the major shareholders through the earnings management approach to erode the interests of small shareholders,damage the company's performance.Based on this,this paper attempts to study the relationship between institutional investors and accrued earnings and real surpluses from the perspective of earnings management,at the same time,packet inspection in large shareholder structure and non absolute control of the relationship between institutional investors and earnings management is affected by the conditions,so as to verify the ownership structure governance effect on the emergence of institutional investors effect.In this paper,1391 data of The GEM listed companies from 2012 to 2015 are selected as the object of study,with the proportion of institutional investors as independent variables,accruals and real earnings as the dependent variable,and joined the enterprise scale,the proportion of the first shareholder,asset liability ratio,type of audit opinion,return on assets,the proportion of the company growth and other six control variables to build the relationship model.The Jones model and the Roychowdhury model are used to calculate the accrual earnings management and the real surplus manipulation respectively.At the same time,the first largest shareholder is divided into absolute holding and non-absolute holding by 50%shareholding ratio,respectively,to verify the relationship between the proportion of institutional investors and earnings management,to see the control of large shareholders will influence the relationship between institutional investors and earnings management.Through the descriptive statistic,correlation analysis,regression analysis and robustness test of the hypothesis model,this paper draws the following conclusions:1)Institutional investors have significant negative correlation to accrued earnings management;2)Institutional investors' holdings are significantly negatively correlated with real earnings management;3)Under the condition of the absolute holding of large shareholders,the inhibitory effect of institutional investors on earnings management has been significantly weakened,indicating that institutional investors will not achieve supervision and checks and balances when the ownership structure is concentrated,Not a positive governance role.Finally,the countermeasures and suggestions,combined with the conclusions of this study,this paper from the perspective of improving the company's equity governance,curb earnings management perspective,and promote the healthy development of institutional investors perspective.First of all,from the perspective of improving the company's equity governance,we can establish a multi-stakeholder structure and improve the independent director system,so as to establish an effective supervision and checks and balances mechanism.Second,from the perspective of restraining earnings management,internal control and internal and external audit policies can be strengthened.Finally,from the perspective of promoting the healthy development of institutional investors,we need to provide a good internal and external environment and establish a strict exit approval mechanism.This paper hopes to improve the company's earnings management from the above three perspectives,so as to optimize the allocation of social resources.