Regional Air Quality Uncertainty And Earnings Management Of Listed Company

Air quality is not only the environmental pressure faced by the Chinese government and enterprises,but also the unique natural background of the behavior of Chinese enterprises.Whether it is at the macro level or at the micro enterprise level,existing studies believe that absolute indicators of air quality will affect the behavior of governments,enterprises,and investors.However,the research on the factor of air quality fluctuation is relatively blank,and its impact on micro-enterprises’ business activities and decision-making behavior is a problem worthy of in-depth discussion.The Air Pollution Prevention and Control Action Plan requires that the concentration of inhalable particulate matter in cities at the prefecture level and above will drop by more than 10% compared with 2012 by the end of 2017.In this context,local governments will pay great attention to regional air quality fluctuations.In the existing literature,there is relatively little research on the macroscopic factor of air quality fluctuation,but its influence on the micro-enterprise business activities and decision-making behavior is a problem worthy of further discussion.When the regional air quality index fluctuates greatly,it means that local governments are facing greater political and environmental risks,especially after the Ministry of Ecological Environment has published the regional air quality rankings in real time every month since 2013,such huge external pressure will inevitably be transmitted to the enterprises under its jurisdiction,and then affect the decision-making behavior of the enterprises.Based on the perspective of air quality uncertainty,this paper empirically examines the impact of rising political costs caused by regional air quality fluctuations on corporate earnings management strategies.In this paper,we take the data of listed companies in Shenzhen and Shanghai in2014-2017 as the research sample,and empirically examine the influence and mechanism of regional air quality uncertainty on enterprises’ earnings management strategies.The results of the study show that when the air quality uncertainty increases,listed companies tend to increase the degree of earnings management to deal with,and are more willing to conduct downward earnings management.In order to refine the impact of air quality uncertainty on earnings management,the study further investigated whether the political cost caused by air quality uncertainty is different under the influence of macro and micro factors.The results show that the effect is more significant in the regions with air quality ranking in the bottom ten,low marketization and Northern provinces,and is more significant in the companies with high media attention and manufacturing industry.In addition,we find that air quality uncertainty affects earnings management through government environmental investment as an intermediary.This paper focuses on regional air quality fluctuations,explores the influence of air quality uncertainty on earnings management decisions of enterprises from a unique perspective,and obtains the decision-making behavior pattern of enterprise management in the face of external environmental risks.The conclusions not only enrich the relevant studies on the influencing factors of political cost and earnings management,but also provide an empirical basis for the relevant departments to strengthen air quality supervision.There are 1 figures,12 tables and 183 references in this thesis.