Product Market Competition?Institutional Holdings And Earnings Management

Experts and scholars have been studying corporate governance for more than 20 years.The focus of their research is on how to mitigate and resolve problems and contradictions arising from the separation of company ownership and management rights in today's market environment.The content mainly involves the internal governance mechanism of the company's shareholding structure,the board of directors,the board of supervisors,and the manager's ability.However,people realize that the effects of these mechanisms are still insufficient.As the level of competition in the market is getting higher and higher,and the market environnent is becoming more and more mature,people's understanding and research on corporate governance are no longer limited to internal governance mechanisms.External governance mechanisms,especially theoretical research on product market competition.It has also received more and more attention from scholars.Based on China's unique economic and market environment,this paper studies the correlation between product market competition and earnings management,and uses institutional investors as a regulatory variable in order to enrich existing relevant theories and to formulate governance in future listed companies.When strategies and institutional investors introduce policy development,they will bring some reference.The study of earnings management has been enduring for a long time in the academic world,especially after the emergence of real earnings management.Expo and domestic literature,most of the relevant theory of earnings management,whether it is for real activities or accrued earnings management,only from the perspective of internal corporate governance,often focus on research shareholders' meeting,board of directors,board of supervisors,management compensation The relationship between internal governance elements and earnings management.Little is known about the correlation between product market competition and earnings management,which serves as a relevant external governance element.Although there are a few studies in the academic world about the relationship between product market competition and earnings management,most of these studies only focus on accrued earnings management,but lack theoretical research and empirical tests on real-life earnings management.Research on the impact of corporate competition in the market on earnings management remains to be enriched.In view of the above deficiencies,this paper attempts to study the impact of product market competition on earnings management from the perspective of product market competition,study the correlation between product market competition and earnings management,and join the internal factors of institutional investors' shareholding ratio to explore internal and The interaction between external governance factors and earnings management complements existing research.That is,the core question of the article is:How does the degree of competition in the enterprise market affect earnings management behavior?How to further influence the choice of the way of accruals and real activity surpluses?What impact does the participation of institutional investors have on corporate governance in market competition?Based on the latest data from 2013 to 2017 in the A-share market,this paper will conduct empirical tests on these issues based on the theory of principal-agent theory,information asymmetry theory,information hypothesis theory,and liquidation threat hypothesis.The results are as follows:(1)There's a negative correlation between product market competition and corporate earnings management,that is,the more intense the product market competition,the lower the degree of earnings management,especially the real activity earnings management;(2)institutional investors significantly enhance the negative correlation between product market competition and earnings management.Correlation,that is,as the proportion of institutional investors' shareholding increases,the promotion of product market competition on the degree of earnings management is significantly weakened.This paper's main innovation points are as following:(1)When verifying the role of product market competition in earnings management,consider the regulatory role of institutional investors,enrich the situational research of product market competition and exert external supervision and govermance capabilities;(2)From accruals and real activities Comprehensively measure the company's earnings management behavior,and correct the previous research that product market competition only corresponds to the accounting management or real activity earnings management to play a supervisory role.The research contributions of this paper are:(1)Expanding the relationship between market competition and earnings management,including accruals and real-life earnings management.Most of the existing researches are based on listed companies,and only consider the characteristics of the enterprise level,such as the structure of the board of directors,internal control,managerial ability,etc.The external influence mechanism such as research market competition has less effect on earnings management,which is different from earnings management.In the traditional research,this paper combines internal and external factors,conducts theoretical and empirical research on corporate governance,and enriches the theory of corporate governance;(2)this paper is also for corporate stakeholders in future investment activities or cooperation with enterprises.It provides a reference for understanding the company's earnings quality and identifying the company's real financial situation.In-depth analysis and understanding of the real-life earnings management of listed companies,accrued earnings management provide reference,and accurate valuation of enterprises in decision-making is also very practical.