The Impact Of Capital Structure And Its Deviation On Earnings Management Of Listed Companies In China

Earnings management,one of the main means for managers to manipulate profits and whitewash report,has a significant impact on the capital market and the listed company's shareholders,creditors and other stakeholders.With the development of market economy,listed companies earnings management case has appeared in China,and the phenomenon of earnings management has become the focus in the field of corporate finance.In order to realize the maximization of their own benefit maximization or the enterprise value,enterprise managers tend to manage the financial report in the earnings information.The earnings management behaviors lead to distortion of earnings information disclosure in capital market,can't reflect the business conditions,so as to mislead stakeholders outside the company's investment decision.Then the optimal allocation of the economy resources can't be achieved,and if things go on like this,it will be detrimental to the healthy development of the capital market.The research shows that,under the modern corporate system,the root cause of earnings management behavior is the defects of corporate governance structure,in other words,is the agency problem that based upon the separation of ownership and management rights.The capital structure of enterprises as the ratio of equity capital and debt capital,is an important endogenous variable of corporate governance structure.Therefore,whether there is a direct correlation between the behavior of capital structure and earnings management,and whether the change of capital structure will affect the earnings management,has become a topic worthy of study.This paper will study the relationship with earnings management from the perspective of the company capital structure.This paper argues that corporate governance structure leads to earnings management behavior,and capital structure as the relation of the interests of enterprises' rights and obligations,has a significant impact on the corporate governance structure.Thus capital structure will influence the behavior of earnings management,and different capital structures cause different ways and degree of earnings management.If the company's capital structure is reasonable and operating is in good condition,while the motivation for managers to use earnings management manipulation of the profit is weak;if the company's capital structure is not reasonable or abnormal changes,may cause the company operating difficulties,and strengthen the management of earnings manipulation.By adjusting the capital structure will restrain earnings management to some extent,improve the quality of earnings information,and promote the healthy development of the capital market.It is of great significance to study the relationship between the capital structure and earnings management of Chinese listed companies.Based on the study of earnings management and capital structure in China and foreign countries,this paper empirically tests the relationship between earnings management and capital structure and capital structure changes of Listed Companies in China.Based on the listed companies in China 2002-2016 data as sample,this paper establish a series of econometric models to test whether there was a significant relationship between the capital structure and earnings management pattern and the degree,and further examine the change of capital structure impact on the earnings management.According to the regression results concluded that there was a significant relationship between the listed companies and earnings management degree and the capital structure.When the company increased leverage,managers take earnings management to manipulate profits to meet the interests of shareholders;if the company's capital structure changes,namely the leverage from the corporate target leverage,managers should count the earnings management motivation decreases.Thus,there is a significant relationship between China's listed companies earnings management and capital structure.