Business Cycle?Industrial Characteristics And Earnings Management Of Listed Companies

In recent years,the earnings management of listed companies emerges in an endless stream in China.For example,ST Hualong through related party transaction intends to the great restructuring of asset.Hebei Metallurgical Industry achieves smooth profit and avoids loss by changing the depreciation period of fixed assets.Jade Bird Huaguang uses related party transactions inflating income in order to delisting.There are many factors affecting earnings management,both micro factors and macro factors.At present,there are too much literature about micro factors affecting earnings management,such as salary of high-level managers,stock price,audit quality,ect.However,they ignore the influence of macro factors such as business cycle and industrial characteristics on earnings management.Then,if business cycle affects earnings management and different industrial characteristics affect earnings management.The thesis studies the effects of business cycle and industry characteristics on earnings management,combined with national conditions,from the internal control,CPA audit and government supervision,putting forward relevant suggestions to improve the authenticity of financial reports and the effective allocation of resources.By combining theoretical analysis with empirical research,this thesis is based on contract theory,principle-agent theory and information asymmetry theory,analysing the motivation of earnings management.And on this basis,this thesis analyse the effect of business cycle and industrial characteristics on earnings management in depth.This thesis taking Shanghai and Shenzhen A stock as a simple of 2002-2014,business cycle and industrial characteristics as a starting point,using 17,601 active samples,35 industries,12 control variables,GDP growth rate and main business turnover rate as substitution variables,structuring multiple regression model,using Stata studies the difference of earnings management in different stages of business cycle and industrial characteristics.If the industry cyclical and market competition will affect the extent of earnings management.The results show that the extent of earnings management of listed companies is greater in systole than expansion and the extent of earnings management of listed companies is greater in periodical industry than non-periodical industry.The more market compete,the smaller the extent of earnings management is.Through the conservativeness test,the business cycle and industry characteristics will have an impact on earnings management.The above results show that we should take business cycle and industrial characteristics into consideration in the study of earnings management.