A Study On Supervision Effect Of Bank Loans On Earnings Management

Finance is the core of the modern economy,and banks are important financial intermediaries.In recent years,China has been deepening the reform of the financial system,the Nineteenth National Congress and the National Financial Work Conference have repeatedly emphasized that it’s necessary to promote the market to play the decisive role in the allocation of financial resources and improve the degree of financial marketization.On the background of macroeconomic development,there have also been some bank debt defaults in some companies,which has caused widespread concern.Therefore,the paper studies the supervision effect of bank loans on companies.The research is very meaningful for improving the supervision function of banks on the listed companies and evaluating the achievements of Chinese financial reform.Moreover,it can also provide theoretical foundation for further deepening the structural reform of the financial supply side.Banks loan supervision over earnings management of the firms is one side of the credit governance.In the context of the continuous development of financial marketization,in order to study the efficiency of bank loan supervision in China deeply,the A-share manufacturing enterprises in 2008-2017 were selected as research samples,and the modified Jones model was used to calculate the maneuverability accruals as the indication of their earning management.Based on the perspective of financial marketization,the fixed effect model is used to study the supervision effects of Chinese banks over corporate earnings management,combined with macroeconomics and macroeconomics.In this paper,the multivariate regression analysis and the intersection test are performed on the full sample,the regional sample and the enterprise nature sample.The empirical results show that the supervision effect of bank loans have a significant negative correlation with earnings management,However,there are differences in the effect of loan supervision in different regions and loans for different maturities.The higher the degree of financial marketization,the stronger supervision effect of banks on corporate earnings management.Under the background of financial marketization,supervision effect of bank loans is stronger to non-state-owned enterprises than that of state-owned enterprises.The above results indicate that the development of financial marketization is beneficial for the supervision effect of bank creditor.However,for different regions and enterprises of different natures,there are still differences in the effectiveness of bank loan supervision.Therefore,this paper proposes the following policy recommendations:reducing government intervention and promoting the marketization process of the banking industry;breaking local restrictions and building an inclusive financial system;improving the laws and regulations governing bank loans;and building an effective supervision mechanism for bank creditor governance.