Research On The Impact Of The Annual Earnings Forecast On Earnings Management

In order to alleviate the contradiction of information asymmetry and weaken the severe market reaction caused by the annual report,the earnings forecasting system came into being.Research shows that the annual earnings forecast has information content,which can significantly affect the behavior of information users,and thus effectively weaken the disclosure effect of the annual report.The function of disclosing information may make the annual earnings forecast become a tool for the companies and the managers to influence the judgment and behavior of the information users.The managers managed earnings and disclose the guiding earnings forecast to adjust the users' behavior and change company's stock price.Based on this,the research topic of this paper is proposed: the impact of annual earnings forecast on earnings management.Based on information asymmetry theory,signal transmission theory,accounting information view theory and contract theory,this paper analyzes the impact mechanism of annual earnings forecast on earnings management.On the basis of this,combined with the moderating effect of voluntary disclosure characteristics and forecast interval characteristics,and then put forward the research hypothesises.This paper selects a total of 9725 observations of A-share listed companies that disclosed the annual eanings forecast in 2008-2017 as a research sample,and calculated two types of earnings management based on the modified cross-section Jones model and Roychowdhury model.Based on this,the paper adpot statistics' description.univariate tests,correlation analysis,and multiple regression analysis procedures empirically test the hypothesises of this paper.The conclusions of this paper are as follows:(1)When the actual earnings of the current year is lower than the forecasted,there is positive earnings management,that is,the managers adopt positive earnings management to increase the earnings information.(2)When the actual eanings of the current year is higher than the forecasted,there is negative earnings management,that is,management adopts negative earnings management to reduce earnings information.(3)The more the actual earnings of the year deviates from the forecasted,the greater the degree of earnings management.(4)When the annual earnings forecast has voluntary disclosing characteristic,the company has more earnings management,that is,the voluntary disclosing feature has a significant strengthening moderating effect.(5)When the annual earnings forecast has wide-interval disclosing characteristics,the company's earnings management is even less,that is,the wide-interval disclosing feature has a significant weakening moderating effect.Based on the above conclusions,this paper proposes specific policy recommendations from regulators and information users:(1)Regulators can improve the earnings forecast system by adding disclosure content and specifing disclosure forms,and make the use of analysts and auditors to supervise companies with voluntary disclosure characteristic and precise disclosure characteristics,severely crack down on violations that use annual earnings forecasts to guide users' judgment and behavior;(2)Information users should also analyze and apply the information of annual earnings forecast rationally and objectively.The main innovations of this paper are as follows:(1)The existing research focus on the analyzing the impact of earnings forecasting on earnings management.This paper analyzes the impact of earnings forecasting on both real and accrual earnings management;(2)Existing research mainly analyzes the moderating effect of mandatory or voluntary disclosure feature.This paper also analyzes the moderating effect of the disclosure feature of the forecast interval width.