The Influence Of Institutional Investors On The Earnings Management Of Shareholders' Motivation To Reduce Their Holdings Of Restricted Shares

In recent years,China's capital market has developed rapidly and has gradually become an important channel for the allocation of social resources.Listed companies as an important participant in the securities market,its information disclosure has been widely concerned by people.However,listed companies tend to gloss over financial statements for a variety of reasons,which reduces the credibility of information disclosure.Before the reduction of restricted shares,the company often exists earnings management with the purpose of reducing restricted shares,this greatly reduces the reliability of financial reports.Improving the quality of information disclosure before the reduction of restricted shares is of great significance to protect the interests of external investors and further improve the capital market in China.Under the background of the rapid development of China's capital market,institutional investors have also grown year by year.With their own professional advantages and scale advantages,institutional investors can have a certain impact on the earnings management of listed companies.Heterogeneous institutional investors have different effects on earnings management.This paper examines the effect of institutional investors on the company's earnings management in the context of the reduction of restricted shares.Taking the company in which the restricted shares was reduced during 2012-2016 as the research object.First of all,examines whether the company tends to make positive earnings management before the reduction of restricted shares,and tests the relationship between the scale of the restricted shares reduction and the degree of earnings management to confirm that there exists reduction motivation of earnings management.Under this prerequisite,this paper studied the impact of institutional investors on earnings management before the reduction of restricted shares and discuss the different impacts of heterogeneous institutional investors on earnings management.The empirical research shows that the company tends to make positive earnings management in the year prior to the reduction of the restricted shares,and the degree of earnings management is significantly related to the scale of the reduction,there exists reduction motivation of earnings management in the companies.The institutional investment has not been constrained this type of behavior in general,but it has stimulated the earnings management behavior.In order to study the different effects of heterogeneous institutional investors on earnings management,this paper divides institutional investors according to two dimensions.First,institutional investors are divided into stable institutional investors and transactional institutional investors according to their stability in holdings.The study found that stable investors can constrain the degree of earnings management in the companies and the reduction motivation of earnings management is weaker compared to companies with transactional institutional investors.Second,institutional investors are divided into independent institutional investors and non-independent institutional investors according to it's independence.The study finds that non-independent institutional investors stimulate earnings management to a greater extent than independent institutional investors and the reduction motivation of earnings management is stronger than the companies with independent institutional investors.The research in this paper shows that the overall holding of institutional investors does not play a supervisory role,instead,it encourages earnings management before the reduction of restricted shares in the company,especially non-independent institutional investors.Only institutional investors with long-term holdings are relatively stable,they will pay attention to the long-term development of the company,actively participate in corporate governance,and constrain earnings management before the company's restricted shares are reduced.In the context of China's rapid economic development,China's capital marketrelated regulatory systems and policies are in urgent need of improvement.The study in this paper shows the link between the reduction of restricted shares and the earnings management,and shows different types of institutional investors have different impacts on the reduction motivation of earnings management in the context of the reduction of restricted shares.The research provides some reference for improving the disclosure quality of listed companies,and provides a reference for vigorously develop institutional investors to actively participate in corporate governance in China.