The Mechanism And Effect Of Margin Trading On Earnings Management Of Enterprises

Since the pilot project in 2010,the implementation of margin trading system in China has been gradually expanded for many times.So far,more than 950 stocks have been included in the margin trading stocks list.As the only way to short stocks at present,short-selling mechanism not only brings great changes to financial market,but also has a far-reaching impact on listed companies.Firstly,for the financial market,it gives more chances to pessimistic investors,and provides short-selling arbitrage channels,improving the information quality of stock prices.Secondly,from the point of governance,the new trading mode of short selling will make external investors and other stakeholders pay more attention to the business status and financial information of the enterprise,actively tap the negative information and hidden information of the company,so as to exert external supervision pressure on listed companies,so that they can restrain their own behavior.Based on this,this paper chooses earnings management as the research perspective,trying to explore the mechanism of margin trading mechanism on earnings management and governance effect.With regard to the structure design of this paper,firstly,it reviews and summarizes the research results of domestic and foreign scholars on margin trading mechanism and earnings management by using the method of literature research.Then,it will elaborate one by one the classical theories related to this theory,such as principal-agent theory and signal transmission theory,by using the theoretical research method,which will provide a solid foundation for the theoretical part of this paper.After analyzing previous researches and considering the current situation and development of our country,this paper puts forward the hypothesis of the effect and mechanism of margin trading on earnings management and uses two measurement models to test the theoretical hypothesis.In the difference-in-difference model,we take the advantages of the natural quasi-natural experimental environment created by the gradual pilot model in China.The stock that was included in the target of margin trading was taken as the experimental group,and the pool stock that was not included in the target of margin trading was taken as the control group.The effect of the policy was tested by comparing the change of the control system difference between the two groups before and after the experiment.In the selection of explanatory variables,considering that earnings management behavior is mainly measured by real earnings management behavior and accrued earnings management behavior,the two variables are taken as explanatory variables.Then,we introduce three proxy variables of action mechanism to test the hypothesis of action mechanism and policy effect proposed in the theoretical part.In order to further differentiate the different roles of financing and securities trading mechanisms,this paper chooses the listed companies as the research sample in the general panel model and chooses the actual transaction data of two types of transactions to demonstrate the role of financing and securities trading mechanisms in earnings management of enterprises.Through the empirical test of two mathematical models,this paper finds that:(1)the implementation of margin trading system can supervise and govern the real earnings management and accrued earnings management;(2)there are three main influence paths of margin trading mechanism on enterprise earnings management: compensation contract path,information transmission path and analyst tracking path;(3)financing transaction plays a significantly positive effect on the level of real earnings management and the average of accrued earnings management of enterprises,which conforms to the "pressure hypothesis".The relationship between securities trading and the level of accrued earnings management of enterprises is not significantly negative,which does not conform to the "supervision hypothesis".It has a significant negative relationship with the level of real earnings management of enterprises and conforms to the "supervision hypothesis".The above conclusions show that the implementation of margin trading can play a certain governance effect on earnings management.But because of the implementation of the mechanism is still in the stage of gradual expansion,the governance effect is also vulnerable to external environment and its own limitations.Therefore,in order to play a better role of governance,this paper puts forward several relevant suggestions:(1)In order to give more voice to the market,further improvement and optimization for our margin trading system are needed.For example,expanding the scope of securities trading,lowering the entry threshold to increase volume,simplifying the trading procedures and reducing transaction costs,etc.(2)Encouraging listed companies to further optimize other internal control systems such as company compensation.For example,setting up salary committee,optimizing corporate governance structure,strengthening internal audit and information communication to enhance the effectiveness of internal supervision.(3)Joint other external forces to encourage external oversight bodies to actively participate in corporate governance.For example,the listed companies should be encouraged to choose professional accounting firms for external audit,establish and improve the reputation system of analysts and the quality control mechanism of research reports,etc.The innovative point of this paper is to refine the impact of margin trading on earnings management on the basis of previous scholars' research on the impact of margin trading on earnings management.It mainly elaborates the mechanism from three transmission paths.At the same time,it separates the financing trading mechanism from the margin trading mechanism and chooses the actual trading volume as the analysis index,so as to make the analysis of the relationship between the two more complete and relevant.