Research On The Impact Of Financing Structure On Earnings Management Of Commercial Banks In China

With the continuous acceleration of the listing process of the banking industry,as a special enterprise,commercial banks are bound to face increasingly stringent information disclosure requirements.In order to expand the scale of operation and economic benefits,and cater to investors and market preferences,managements inevitably manages earnings.This may cause stakeholders to question the authenticity of the published financial information which reflects the bank's operating results and profitability,and even doubt the entire financial reporting system,which will not conducive to the healthy development of the capital market.Based on this,scholars at home and abroad have conducted extensive research on how to control the earnings management of commercial banks.The research contents of Chinese scholars include exploring the impact of executive compensation,board characteristics,foreign investors and equity concentration on earnings management,and the commercial bank financing structure has not considered as an influencing factor of earnings management.However,foreign scholars have confirmed in the literature that financing structure could make a difference on earnings management.Therefore,take Chinese commercial banks as an object to study the impact of financing structure on earnings management has certain theoretical and practical significance.This article takes the financial data of 79 commercial banks in China from 2011 to 2018 as the research object to explore the impact of bank financing structure on its earnings management,and classify banks according to the degree of constraints they face in the market,administrative intervention and information disclosure,so as to study the heterogeneity of impacts on commercial banks.The results show that the greater the proportion of core deposits in the financing structure of commercial banks,the greater the degree of earnings management.Further analysis found that as the proportion of core deposits in the financing structure increases,unlisted commercial banks are more inclined to conduct earnings management than listed commercial banks;commercial banks that are not subject to government administrative intervention are more likely to conduct earnings management than commercial banks that are subject to government administrative intervention;commercial banks that are not audited by the international big four accounting firms are more inclined to conduct earnings management than commercial banks audited by the international big four accounting firms.Besides,this article also discusses measures to weaken the degree of earnings management of commercial banks,and confirmed that the improvement of government governance helps to weaken the degree of earnings management of commercial banks.Finally,based on the aforementioned empirical conclusions and theoretical analysis,this article puts forward five targeted policy recommendations: firstly,encourage commercial banksto improve their financing structure,reduce the proportion of core deposits,and accelerate the development of wholesale financing business;secondly,support more commercial banks to go public and increase information disclosure of commercial banks;thirdly,the government should effectively suppress the earnings management of commercial banks through administrative intervention;fourthly,improve the supervision system and call on commercial banks to choose accounting firms with more professional capabilities;fifthly,improve government governance to create a healthy and fair business environment for commercial banks.