An Empirical Research On Earning Management About Chinese Real Estate Industry

As China's economic and political reform, capital market development and regulations change and improvement, Earnings management has become one of the focuses of attention in China's stock market development process to stakeholders, especially investors, creditors, government departments, the accounting standards setting bodies. However, with the development of stock markets, earning management of listed companies has become increasingly serious. The real estate industry which is rapid development, by many investors pay close attention and favor of is no exception. Earning management of listed companies not only affects the investment behavior of investors, but also hinders the healthy development of China's stock market. And there are many listed companies in China and comparison of the distribution of industry are wide, so manager of the company's earnings management tools are not the same. The direction of earnings management based on management's intent and purpose is also different and the appropriate extent of earnings management will be different too. Therefore, we should understand the earnings management fully and to reveal the earnings management of the listed companies, and put forward effective control and improvement measures. This article is combined with the characteristics of real estate listed companies and the characteristics of earnings management and through theoretical analysis and empirical study to remind investors pay attention when making investments and put forward some effective control and improvement measures.This paper first introduces the concept of earnings management and its characteristics, motives and methods the company used to manage the earning. Then this paper combined the characteristics of China's real estate listed company to analysis the motives and means of earnings management. Next we select 70 real estate listed companies which match the filter conditions as the empirical research samples. We use these companies'data from 2006 to 2009 for each quarter to analysis and research the features of the real estate listed companies' earning management from an empirical perspective.In the empirical research process, we analysis the test models of earning management between domestic and foreign scholars, finally we select the extended Jones model to measure non-discretionary accruals and discretionary accruals. Then we explained the calculation of each parameter. In specific empirical operation, we make descriptive statistical analysis of total accruals first, and then we tested the significance of the model's overall regression with the R2 analysis and ANOVA (variance) analysis. Subsequently, the significant of the model's regression coefficients was T tested. Finally, we make the statistical analysis to discretionary accruals (residual), thus we proved that all the assumptions in this paper. The results show that the China's real estate listed companies industry significantly to positive earnings management in the annual reports. In the audit report which is completed after the first quarter and the second and third quarter financial, there were negative for earnings management. Finally, this article surplus management policy and recommendations based on the results of empirical research. For example, standard-setters should continue to improve accounting standards and accounting systems; companies must strengthen their internal management and external supervision and improve the corporate governance structure; the government should strengthen the integrity and moral construction, etc.This paper is divided into five parts. Part one is the introduction part. It introduces the research background and significance about this paper, the research method and systematic literature review of research literature related to earnings management. Part two focuses on the basic theory of earning management, including the concept, characteristics, motives and methods of earning management. Part three summarizes the real estate industry and its current situation and its motivation of earnings management. Part four is an empirical analysis part. This part selected some data of real estate listed companies from 2006-2009 to make an empirical analysis. The empirical results show the existence of earning management in the real estate listed companies. The first three quarters of negative earnings management tend to be tax avoidance, and it will be transferred by the behavior of accounting profits in the year end because considered of the public statements on the impact of corporate performance. Part five summarized conclusions and make relevant policy recommendations on the basis of the study.