Managerial Ability,Heterogeneity Of Institutional Investors And Corporate Earnings Quality

Earnings information as an important medium to convey the company's operating conditions,is an important basis for internal and external investors and other stakeholders to make decisions.With the continuous reform of Chinese accounting standards,it also leaves some space for the company's management to make alternative choices of accounting policy.This kind of earnings management behavior of management greatly undermines the quality of earnings information and directly affects the correctness of stakeholders' decision-making.The existing studies on earnings quality are mostly concentrated on the effects of factors such as equity balance,board characteristics,and institutional environment.Maybe due to the difficulty in obtaining properly surrogate variables for management capabilities,there is little research on managerial ability and quality of earnings in China.Research.In reality,the managerial ability's effect on earnings quality cannot be ignored.The separation of ownership and management allows management having the company's management rights,which makes management have a huge impact on the company's performance,especially the accounting behavior.Relevant research on the issue of management ability has been less studied in the past due to its abstract and difficult to measure accurately.Until Demerjian(2012)proposed the DEA-Tobit two-stage regression method,the management ability was comprehensively and specifically quantified,and the research began to increase.However,management is heterogeneous.Different management uses different resources to produce different efficiency,and the judgment of the same situation and the choice of accounting policies are different.So,will the quality of earnings of financial reports provided by management with different capabilities be different?What are the characteristics of differences?Will internal and external supervisory factors affect this relationship?This is not only an issue that needs to be explored in the study of the economic consequences of management ability,but also a way of providing ideas and suggestions on how to properly guide management.At the same time,in recent years,with the rapid growth of the securities market,institutional investors have made extraordinary progress.The "Three Conferences"stated that institutional investors have an extraordinary "power of the primordial"and can become stabilizers in the economic field,and can also disrupt the order of one industry and one market.So does the external supervision mechanism of institutional investors have any influence on the relationship between management ability and earnings quality?Therefore,this thesis selects management ability,earnings quality,and heterogeneous institutional investors as the research object.Taking the data of A-share listed companies in China's Shanghai and Shenzhen stock markets from 2008 to 2017 as a sample,starting from the theory of principal-agent theory and information asymmetry,the quality of earnings is measured from accrual earnings and real earnings these two aspects,the managerial ability is measured by DEA-Tobit two-stage regression,and the model using in measuring managerial ability is more accurate.Through normative analysis and empirical tests,I firstly analyze the relationship between management ability and earnings quality.Based on this,I study the impact of institutional investors on the relationship between managerial ability and earnings quality,and further take the institutional investors heterogeneity into account,grouped tests are conducted,and the differences in effect between stable and transactional institutional investors are compared and analyzed.The research in this thesis mainly includes the following six parts.The first part is the introduction.This part mainly elaborates on the research background and research significance,research methods and research framework,concept definition and main innovation points.The second part is the literature review.This part reviews and combs the domestic and foreign literatures from the aspects of measurement and economic consequences of management ability,earnings quality,and heterogeneous institutional investor governance effects.The third part is the theoretical analysis and hypothesis.This part elaborates and analyzes the theoretical research foundation,principal-agent theory and information asymmetry theory,and proposes the research hypothesis of three aspects from the theoretical basis.The fourth part is research design.This part firstly describes the sample selection and data source of the research,and then expounds the selection and definition of the variables of the research,and finally establishes the research model.The fifth part is the empirical test and the result analysis.The part firstly descriptive statistics and analysis of the sample,followed by the mean and median difference test,and the correlation analysis of the variables,then the empirical test of the data and the results analysis,and finally the robustness test of the research conclusions.The sixth part is the research conclusions and suggestions.This part puts forward the research conclusions of the thesis,and proposes targeted policy recommendations based on the research conclusions.Finally,the research limitations and research prospects of this paper are put forward.The main conclusions of this thesis include:(1)The coefficient between management ability and real quality of earnings/accrued earnings quality is significantly negative,which indicates that the higher the level of real/accrual earnings management made and the worse the real quality of earnings/accrued earnings quality disclosed by management with stronger ability;(2)The higher the proportion of institutional investors holding shares,the stronger the inhibitory effect on the negative correlation between management ability and real quality of earnings/accrued earnings quality;(3)Further considering the type of institutional investors,the higher the shareholding ratio of stable institutional investors,the more the negative correlation between management ability and real quality of earnings/accrued earnings quality can be significantly eased,however the mitigation effect of transactional investors is not significant.It shows that stable institutional investors have played an active role in corporate governance,and transactional investors have little corporate governance effect.The positive exploration of this thesis lies in:First,on the basis of the research on the relationship between management ability and earnings quality,innovatively introducing the external governance factor of institutional investor heterogeneity as a regulatory variable,investigate the impact of institutional investor holdings on the relationship between management ability and earnings quality from a new perspective,and further distinguishes between types of institutional investors,and comparatively analyze the differences in the influence of heterogeneous institutional investors.Broaden the research field of the influencing factors of the relationship between management ability and earnings quality,and enrich the research literature on the heterogeneity of institutional investors;Second,compared with accrued earnings management,management of real activities which management are more focused and prone to is more subtle.This thesis not only selects accrued earnings quality,but also selects the real earnings quality measured from the degree of real earnings management.The thesis broadens the research on the relationship between management capability,institutional investor heterogeneity and earnings quality to the real surplus field.