The Impact Of Institutional Investors On Real Earnings Management

In theory and practice,earnings management has been more and more popular.In recent years,it has been found that with the improvement of the legal system and accounting standards,the listed companies have the less accruals earnings management and the more real earnings management.Real earnings management is more concealed and more dangerous.Meanwhile,as professional and important investors in the capital market,institutional investors increase gradually.Institutional investors can inhibit earnings management activities and play a certain role in listed company governance.This has been supported by empirical data abroad.China has unique social system,institutional background and new transitional capital market characteristics.The factors such as the property rights of the listed companies,the shareholding of large shareholders and the structure of investors all influence institutional investors'inhibitory effect on earnings management,and also affect the effectiveness of institutional investors to govern the listed companies.The paper,drawing on existing research at home and abroad,focusing on the real earnings management,based on A-share listed companies'data from 2009 to 2016,analyzes the relationship between shareholding ratio of institutional investors and real earnings management level.Also the paper further study whether nature of property rights and shareholding ratios of the largest shareholder have influence on the relationship between the two parties.After regression analysis and robustness test,the results show that institutional investors can inhibit real earnings management activities of listed companies.At the same time,it is found that:(1)The real earnings management level of listed companies are different because of nature of property rights and shareholding ratios of the largest shareholder.The state-owned companies and the largest shareholder controlling companies have higher level of real earnings management.(2)Institutional investors in state-owned companies and non-stated companies can both inhibit real earnings management,but this inhibition becomes weakened in state-owned companies.(3)The institutional investors in the absolute holding companies and the non-absolute holding companies can all restrain the real earnings management.But the inhibition is weakened in the absolute holding companies,and the higher the shareholding ratios of the largest shareholder are,the weaker the inhibition is.The conclusions of this paper have been used for reference in the research and practice of institutional investor,earnings management,state-owned enterprise reform and corporate governance.