Corporate Strategy, Governance Mechanism And Earnings Management

China's capital market has been in existence for two to three decades since the 1980's.The enterprises in the capital market cannot continue to develop and progress without strategic guidance and planning.When the company fails to achieve its expected strategic objectives,the management may adjust the company's earnings to a certain extent based on a variety of motives.Earnings management,as a common phenomenon in China's capital market,has always been one of the issues of concern in the field of practice and theory.As an economic consequence,earnings management has many factors.This study will examine whether it will affect earnings management from the perspective of corporate strategy.This paper mainly studies the influence of corporate strategy on earnings management and the relationship between them under different corporate governance mechanisms.First of all,through the company strategy,earnings management related literature summarized,found that the company strategy research focused on its strategy division and influence factors.But earnings management is more combined with corporate governance to study its motivation,influencing factors,economic consequences,and so on.In recent years,only a few scholars have linked corporate strategy and earnings management to discuss their impact.After the sample selection,this article studies the A-share listed companies of China's Shanghai and Shenzhen stock markets in 2012-2016.First,we study whether the company strategy will affect the earnings management behavior of listed companies,and on this basis,we divide earnings management into upward earnings management and downward earnings management,and investigate if the company strategy affects earnings management,the listed companies are more inclined to carry out earnings management in which direction.Then through the division of different types of corporate strategies,the impact of different types of strategies on upward earnings management is explored.Finally,from the perspective of the property nature,product market competition,and the audit of international “big four” firms,this study analyzes the relationship between them under different corporate governance variables.Further study on the management of listed companies ' earnings management,whether the earnings management will be carried out through non-recurrent profit and loss,and whether to use the classification of the operation of earnings management?The study found that: First,the more aggressive the corporate strategy,the easier it is for the management to manage earnings.Compared with downward earnings management,corporate strategy has a stronger impact on upward earnings management.The T-test results show that the largest mean value of upward earnings management is an offensive strategy,the smallest is a conservative strategy,and the analytical strategy lies between them.It is found that the difference between conservative strategy and offensive strategy is the most significant.Second,the state-owned nature of the enterprise and the international "big four" audit will weaken the positive impact of the company strategy on earnings management,but the product market competition can enhance it.Third,when we further analyze the specific ways in which management conducts earnings management,we find that listed companies have classified and changed earnings management practices that classify “ non-operating income ” as“operating income”.