Study On The Impact Of Politically Connected Independent Directors On Real Earnings Management

The independent director as a “third party” can improve the corporate governance by means of protecting the interests of minority shareholders and preventing the interest collusion between big shareholders and the management.However,government officials as independent directors of the enterprise lead to a wide range of social debate,and the effectiveness of independent directors is questioned.Based on the political connected background of the independent directors,this paper explores the impact of independent directors on real earnings management and check whether the independent directors play a supervisory role effectively.Firstly,this paper sorts out the domestic and foreign academic research on the independent directors and earnings management,and then explains the related concepts and theories,which can lay the foundation for the subsequent theoretical deduction and empirical research.Secondly,this paper analysises the resources effect caused by political independent directors from the perspective of resource dependence theory and the weak link advantage theory respectively.And on this basis,this paper expounds the mechanism of between independent directors and real earnings management in considering of the nature of property rights and then puts forward the research hypothesis.Again,this paper uses the three component index and a comprehensive index to measure the level of the real earnings management,and constructs the research model by adding the accommodation effect of the nature of property rights.And then,to further explore the influence of independent directors on the real earnings management,this paper makes the multiple linear regression analysis of the four real earnings management indicators.The study finds that enterprises generally have real earnings management behavior.Political background independent directors cannot restrain real management behavior of the enterprise,and it plays a promoting role in a certain extent.The nature of state-owned property rights undermines this relationship.Due to the conflict of the resources support effect and supervisory effect,official director fails to fulfill the supervision function.Finally,according to the research results,this paper puts forward reasonable suggestions for the government and enterprises.