Font Size: a A A

Research On The Correlation Between Financing Demand,Financial Constraints And Earnings Management From The Angle Of Small-and-Medium-Sized Enterprises

Posted on:2018-10-11Degree:MasterType:Thesis
Country:ChinaCandidate:Y X ChengFull Text:PDF
GTID:2359330536987848Subject:Accounting
Abstract/Summary:PDF Full Text Request
Benefiting from the reform and opening-up policy,small-and-medium-sized enterprises have gone through a golden time for development,and consequently,their capital needs have increased dramatically.These enterprises will turn to external financing to seize promising investment opportunities if internal capital could not meet their huge capital needs.Though in China's capital market,small-and-medium-sized enterprises can finance through SMEs board and GEM,their needs cannot be fully satisfied taking into account the effectiveness of financing pattern and the capital amount that can be acquired.In the situation that money is in short supply,money suppliers,say investors or creditors,will raise its price and set restrictive clauses to constrain the financing companies.As a result,unable to afford external capital cost,lots of small-and-medium-sized enterprises sacrifice optimal investment level.This phenomenon can be called financial constraints.In order to meet their financing needs and ease financial constraints,small-and-medium-sized enterprises are likely to implement earnings management to mislead investors or creditors while fighting for limited money resources.This paper studies the correlation between financing needs,financial constraints and earnings management from the perspective of external financing of small-and-medium-sized enterprises.Research in this paper firstly defines some key concepts,such as earnings management,financing needs and financial constraints,and expounds relevant theoretical basis and evaluates existing research situation.Secondly,to solve the key problem of financial constraints measurement,this paper designs the discriminant model of financial constraints and adopt ordered logistic regression to build up financial constraints index for small-and-medium-sized enterprises.Under the basic principles of game theory,this paper analyses the capital suppliers' and managers' behaviors in the process of financing and puts forward research hypothesis.Based on the data of listed companies according with China's SME criteria on GEM,this paper examines how financing needs and financial constraints influence different earnings management behaviors and the influence that earnings management have on financial constraints from the angle of small-and-medium-sized enterprises.Through empirical analysis,this paper draws conclusions as follows.Firstly,financing demands has positive impact on both accrued earnings management and real earnings management,and financial constraints significantly inhibit accrual earnings management,while it fosters real earnings management.Secondly,there is no obvious correlation between interaction term of financing needs and financial constraints and accrued earnings management,but interaction term of financing needs and financing constraints positively influences real earnings management significantly.By examining how earnings management effects financial constraints,this paper finds that related to real earnings management can obviously decrease SME's level of financing constraints,while accrued earnings management lifts up it.The empirical results show that the existence of financing needs and financial constraints encourages SME's real earnings management behaviors,but small-and-medium-sized enterprises decrease accrued earnings management due to financial constraints.Accrued earnings management can be easily spotted and consequently,increase the capital costs,so that small and medium-sized enterprises may face more serious financial constraint if they conducted high level of accrued earnings management.While in the meantime,real earnings management offers a better way for small and medium-sized enterprises to dress up financial performances considering its elusiveness,and therefore significantly reduces financial constraints.
Keywords/Search Tags:Earnings management, financial constraints, financing demand, small-and-medium-sized enterprises
PDF Full Text Request
Related items