An Empirical Study On Managerial Power,Institutional Investor's Shareholding And Earnings Management

Earnings management is an economic phenomenon prevalent in listed companies that directly affects the accuracy of accounting earnings figures in financial reporting,thus influencing the efficiency of capital market allocation.Earnings management is divided into two categories according to the different means of implementation:accrual earnings management and real earnings management.Accrued earnings management is mainly through the accounting policy selection and change to achieve the purpose of manipulating the surplus,real earnings management is deliberately changed by the transaction or arrangements for the transaction to achieve the purpose of manipulating the surplus.The separation of ownership and management rights under the modern enterprise system has led to the issue of principal-agent and insider control.When the managerial power is large,they usually use their own ability and power to rent,that is,in order to seek private management may be through earnings management to manipulate profits.In recent years,China's rapid economic development,the capital market has become an important channel for the allocation of social resources,but the effective manager of the market in China has not yet fully established,the lack of managerial behavior incentive mechanism of effective constraints and incentives,which makes managers abuse of power surplus Management of self-interest behavior more unscrupulous.In addition to internal governance,external regulation is one of the factors that affect earnings management.Institutional investors as the emerging subject of the securities market,holding shares of listed companies to become shareholders,they become a new force in the balance of equity.Thus,they are not only the backbone of the development of national securities markets,but also an important factor in optimizing corporate governance.This paper uses institutional investors as a regulatory variable to study its impact on the relationship between managerial power and earnings management.This paper argues that institutional investors with information,size and professional advantages can actively participate in corporate governance and form effective supervision over management.This paper takes the listed companies in Shanghai and Shenzhen as a sample,studies the earnings management behavior of listed companies from the perspective of managerial power,and joins the adjustment variables of institutional investors to study the relationship between managerial power and earnings management impact.The results show that:(1)the greater the managerial power,the greater the degree of accrual earnings management and real earnings management.(2)The higher proportion of institutional investors,the more likely it is to curb the earnings management behavior caused by excessive managerial power.This article includes the following five sections.The first part,the introduction.Firstly,this paper puts forward the background of the topic in the light of the uncertainties in the environment in which the enterprise is located,and puts forward the research significance of the research on earnings management,managerial power and institutional investor's research.Secondly,further clarify the purpose of this study,research content and research methods;finally,clarify the innovation of this article.The second part,literature review.This paper reviews and combs the relevant literatures at home and abroad from three aspects:earnings management basic theory,managerial power and earnings management,institutional investor holding and earnings management.On this basis,review the existing literature and summed up the lack of research results.In this part,the theoretical starting point of this paper is information asymmetry theory and institutional investors and equity competition theory and so on.On the basis of the above theory,this paper analyzes the relationship between managerial power,institutional investor holding and earnings management,and puts forward the hypothesis of this paper.The fourth part,the empirical research of managerial power,institutional investors holdings and earnings management.First,prepare for sample selection,model setting,and variable definition.Secondly,through the empirical analysis to verify the hypothesis proposed in this paper.Finally,the robustness test is performed on the empirical analysis.The fifth part,the research conclusion and the suggestion.Based on the results of the empirical research in the fourth part,the author draws the conclusion of this paper,and puts forward the policy suggestions of this paper from the perspective of enterprise financial management and national macroeconomic policy,and realizes the theoretical and practical significance of this paper.Finally,put forward the limitations of this paper,and forecast the future research direction.