Research On The Impact Of Derivative Financial Instruments Application On Earnings Management Of Financial Listed Companies

With the continuous deepening reform of the financial system,the derivative financial instrument trading market has received extensive attention and gradually becomes a part of the cost capital market.However,due to the impact of the global financial turmoil,the market of derivative financial instruments has also been affected to a certain extent.The failure of hedging activities and the loss of corporate interests which occurred in both international trading markets and domestic trading markets,have led us to think about rational application of derivative financial instruments and squarely thinking about the market risks that need to be undertaken in the process of application.Economists and investment stakeholders have always focused on the issue of companies'earnings management,either for the benefit of their own investment or for the operation of the economic market,the public has clearly understood that listed companies have more or less incentives for earnings management,and it is necessary that listed companies'disclose the relevant economic behavior information.Whether listed companies use derivative financial instruments for hedging and risk aversion has a role in earnings management,and if it plays a role,then the effect on earnings management is negative or positive.These will become close concerns of information users.Based on the above problems,this paper reviews and analyzes the related literature on derivative financial instruments and earnings management,defines the concepts of derivative financial instruments and earnings management,and expounds related theories.It focus on the listed companies in China's financial industry and analyzes the current status of derivative financial instrument application and earnings management in the industry.It explores the impact between the derivative financial instruments and earnings management and proposes three assumptions;then it selects the companies that disclosed the use of derivative financial instruments in the industry report as a sample,according to the relevant data disclosed in the annual reports from 2011 to 2017,it uses the regression model to empirically analyzes the impact of derivative financial instrument application on the company's earnings management from descriptive statistics,correlation analysis and regression analysis to test the three hypotheses proposed in the article.From empirical research,this paper draws three conclusions:Firstly,the application of derivative financial instruments is negatively related to the degree of earnings management of financial listed companies;secondly,the degree of application of derivative financial instruments is negatively related to the degree of earnings management of financial listing instruments;thirdly,the degree of application of derivative financial instruments is negatively related to the sustainability of financial listing instruments' earnings management.At the end of the article,it puts forward the suggestions and countermeasures that rationally apply the derivative financial instruments,enhance the level of risk management and control for application of derivative financial instruments,regularize the financial market trading system of derivative financial instruments,strengthen financial supervision,improve the information disclosure system of derivative financial instruments,and improve the level of listed companies'information disclosure.It is hoped that it will provide reference basis for the listed company applying the derivative financial instruments reasonably for hedging and risk management,and for the relevant departments improving the derivative financial instrument system and information disclosure system.