Research On Quarterly Earnings Management Of The Listed Companies

Earnings management is one of the focused issues in the accounting research field,which has significant meaning in enterprise management,accounting standards setting,and securities market regulations.Most of the existing academic evidence on earnings management is based on the annual financial reports of listed companies,and few are focused on quarterly financial reports.In recent years,scholars have found that quarterly financial reports positively influence the compliance development of listed companies.Furthermore,regulators and investors have gradually realized that quarterly financial reports play an increasingly important role in market supervision and investment decisions.From 2015 to 2019,the Shanghai Stock Exchange gradually promoted industry-specific supervision and issued a series of information disclosure guidelines in27 industries(the "New Disclosure Guidelines").Quarterly financial reports of affected listed companies face regulatory monitoring that is explicitly tied to operating data.Since then,the regulations have become stricter as information disclosure has become more specific.Under these circumstances,this study focuses on the earnings management of quarterly financial information of Shanghai Stock Exchange listed companies before and after enforcing the New Disclosure Guidelines.Through empirical research,the study tried to assess the variation in the extent of quarterly earnings management of listed companies before and after enforcing the New Disclosure Guidelines.In fulfilling this objective,this study collected nearly 10,000 observations of quarterly financial reports of Shanghai Stock Exchange listed companies covering 27 industries two years before and after the enforcement of the New Disclosure Guidelines.This study indicates that,in aggregate,earnings management is pervasive in each quarter before and after the enforcement of the New Disclosure Guidelines.The results showed an increase in the extent of earnings management quarter by quarter,reaching a peak in the fourth quarter.Second,to further understand the characteristics of quarterly earnings management of specific industries with apparent seasonality and the inhibitory effect of the New Disclosure Guidelines on it,this study also selects listed companies in the agricultural industry on Shanghai Stock Exchange as the research sample.The results show that earnings management in the agricultural industry is smooth among quarters,significantly different from the characteristics of the industry in aggregate.The trend has not changed after the enforcement of the New Disclosure Guidelines.After all,whether from the perspective of the industry in aggregate or only from the perspective of the agriculture industry,the New Disclosure Guidelines have a limited inhibitory effect on quarterly earnings management.This work aims to assess the quarterly earnings management of listed companies before and after enforcing industry-specific supervision,in which little academic evidence exists.On the one hand,it verifies the inhibitory effect of the supervision of the stock exchange on the quarterly earnings management of listed companies.On the other hand,this work analyzes the characteristics of the variation in the extent of quarterly earnings management of listed companies to provide evidence for future research on regulating the capital market.Future research can explore how quarterly earnings management affects the decisions of highly speculative investors or how agencies should facilitate information with investors to guide the healthy development of the capital market under the pervasiveness of quarterly earnings management.