Study On The Influence Of Earnings Management On Business Performance Of Property Insurance Companies In China

In recent years,our country’s property insurance industry has developed rapidly and plays an increasingly important role in the development of the national economy.However,our country’s property insurance industry started late,and the external supervision system and the company’s internal governance system are not perfect enough,so there may be earning management in property insurance companies,which may cause an impact on its business performance.In order to study the impact of earnings management on business performance of property insurance companies in our country,this paper combs the relevant literature and related theories at home and abroad,and analyzes the particularity of property insurance companies and the motivation and means of earnings management.Finally,it is concluded that:property insurance companies conduct earnings management through outstanding claims reserves,which will lead to inter-period changes in business performance and reduce the quality of financial report information,but earnings management that meets the "earnings threshold" will have a certainly positive impact on future business performance.This paper selects the relevant data of our country’s property insurance companies from 2014 to 2020 to conduct an empirical analysis:firstly,an earnings distribution model is established through the return on assets,and it is found that there is an earnings management behavior that meets the "earnings threshold" in our country’s property insurance industry.After analyzing the formation mechanism of outstanding claims reserves,this paper establishes a specific accrual item model through the outstanding claims reserves to measure the earnings management of our country’s property insurance companies.Then,this paper constructs the earnings management measurement results and earnings management target dummy variables as explanatory variables,takes the return on assets as explanatory variables,and selects control variables to empirically analyze the impact of our country’s property insurance companies’ earnings management on the company’s current and future business performance and the additional effects of different earnings management targets.The results show that the earnings management of property insurance companies leads to intertemporal changes in business performance in the short term,in addition,earnings management that meets the "earnings threshold" has an additional positive effect on future business performance,while earnings management based on other goals does not exist.Based on this,this paper puts forward policy suggestions to enhance the external disclosure of property insurance companies’ outstanding claims reserve evaluation information,improve regulatory rules and regulations,establish and strengthen the internal control process for outstanding claims reserve evaluation,improve the compensation mechanism,and strengthen management’s cognition of earnings management.