Research On The Relationship Between Managerial Ability And Real Earnings Management

In recent years,it is not uncommon for domestic and foreign corporate management to manipulate earnings management,such as the financial scandals of Hewlett-Packard in the United States and Toshiba in Japan,and fraud cases such as Chinese Southern Textile and Taihua.The earnings management behavior of an enterprise will not only directly affect the interests of stakeholders,but will further affect the healthy development of the entire capital market.Therefore,earnings management has become the focus of scholars' research in recent years.With the increasingly perfect accounting laws and regulations and the increasingly strengthened regulatory environment,enterprises use the free choice of accounting policies to adjust profits.This traditional method of accrued earnings management will be quickly recognized by market regulators.It is more inclined to choose more complex and more concealed real earnings management.Competent management will better understand the company's own operating conditions,the development of the industry in which it is located,and the development and changes of national policies.Therefore,they can better use this information and integrate it into the company's management decision-making,which affects the company's earnings information.The real earnings management behavior is short-sighted,which will damage the company's future performance and is not conducive to the company's long-term development.The human capital of management is heterogeneous,that is,there are differences in the interpretation of relevant accounting information and the choice of career decision-making by management of different capabilities.Then,will competent management consider from the perspective of self-interest or global perspective? What is the relationship between managerial ability with real earnings management? This is a question worth studying.In addition,companies have their own life cycles like organisms,and they are in different life cycle stages.The management's angle of consideration and the ability and way of dealing with problems are different.These will affect the management's decision-making behavior.Previous studies on managerial ability and earnings management have ignored the dynamic attributes of the firm life cycle.Therefore,this article analyzes the relationship between managerial ability and real earnings management from the dynamic perspective of firm life cycle.The paper through empirical analysis finds that under normal circumstances,managerial ability is positively related to real earnings management.In addition,after considering the factor of firm life cycle,it is found that compared with the maturity period,the degree of positive correlation between managerial ability and real earnings management is higher in the growth period and recession period.After further distinguishing the direction of real earnings management,it is concluded that the degree of positive correlation between managerial ability and positive real earnings management in the growth stage is higher than the maturity stage,and the recession stage cannot be compared with the maturity stage;The level of correlation between managerial ability and negative real earnings management in the growth period and recession period cannot be compared with mature companies.