Earnings Management And The Accounting Principles' Influence On It

Earnings management's increasing damage on the capital market and investors'interests is making it become one of the current focuses of research in the field ofpositive accounting, and resulting in great pressure on organizations that establishaccounting principles. Local scholars have made relatively sufficient statisticalresearch on the existence of corporate earnings management and the problem causedby the extent of such practice, but lack in-depth discussions on the function ofaccounting principles in earnings management activities. This paper examinesearnings management mainly from the perspective of accounting principles to providebodies that establish such principles a basis for drawing up policies for completeaccounting principles. For this purpose, this paper sets up theoretical frame of theearnings management with the standard research method. Based on this theoreticalframe, using case studies, this paper studies the present condition of earningsmanagement in listed companies, analyzes the method and the formation of system inbusiness enterprise when managing earnings, while showing the contradictoryinfluence of accounting principles on earnings management.There are six chapters in this paper. Chapter 1 is an introduction, explaining theresearch background, purpose and methods. The second chapter lays theoreticalfoundation in the successive chapters by defining the concept of earningsmanagement and tallying up the domestic and overseas study results in this area.Chapter 3 explores the present condition of earnings management in China's listedcompanies, and by analyzing methods that earnings management adopt and reasonsthat it produce, confirms the guiding effect of accounting principles on earningsmanagement. As the principal part of the paper, chapter 4 discusses the contradictoryeffect of accounting principles on earnings management, that it since is a check andsupervision factor of the earnings management, and then is an inducement of it.According to the above research, the paper puts forward a countermeasure tostandardize earnings management by analyzing its gains and loses. Being a conclusion,Chapter 6 sums up suggestions for policies that improve China's accountingprinciples.