Research On Securities Analysts Following And Earnings Management

There is information asymmetric existing in modern companies due to the separation of ownership and management rights,modern companies generally suffer from asymmetric information.As an important corporate governance mechanism,analysts can reduce the information asymmetry between shareholders and managers and promote the effective operation of corporate governance mechanisms.Existing researches generally focus on the impact of accrual-based earnings management,and less on the impact of analysts on earnings management through real activities manipulation and the characteristics of analysts.Therefore,this article uses the listed companies in China from 2014 to 2016 as the research object.At the same time,this article use the earnings management model of accrual-based and the earnings management model of real activities manipulation to measure earnings management.Besides to examine the corporate governance effects of analysts' following on the company from analyst following,analyst experience,and the analyst's ranking.This study shows the following conclusions:firstly,securities analysts,top analysts and experienced securities analysts following can all reduce the accrual-based earnings management of companies.Secondly,the following of securities analysts and experienced securities analysts will lead to manager turn to use the more concealed,more flexible,and more destructive earnings management through real activities manipulation.Finally,in the real earnings management of cash flow from operations(CFO),production costs,and discretionary expenses,managers prefer to use discretionary expenses to manipulate earnings management.It can be seen that while securities analysts,top analysts and experienced securities analysts have following on earnings management of enterprises,the following of securities analysts will force managers to use more concealed earnings management through real activities manipulation,especially earnings management through discretionary expenses manipulation,as long as managers' incentive for earnings management are not completely eliminated.