A Study Of Earnings Management With The Listed Companies Based On The Top Managers Turnover

With the quick development of Chinese capital market, academic circles pay more and more attention to earnings management operations of listed companies. Meanwhile, the frequent turnover in top managers of listed companies, namely, the main body of earnings management, have come to be the focus of research, because their turnover are not only one of the important decisions made by the company management to measure the effectiveness of the company administration mechanism and the achievements of top managers, but also concerned with the stability and the future development of listed companies, more importantly, top managers behaviors play a key role in the process of surplus management. This thesis positively analyzes and examines the existence and the tendencies of earenings management operations of listed companies, which is done by means of collecting and statistically analyzing the related data from those Chinese listed companies engaging in communication, household appliances, medicine, etc., in which top managers turnover occurred in Shenzhen and Shanghai in the years of 2001-2003. By reviewing the studies of earnings management and top managers turnover at home and abroad, this thesis expounds the meanings, features, means and advantages and disadvantages of earnings management, which paves the way for the introduction of the relations between earnings management and top managers turnover in listed companies. In the analyses of reasons and motives of top managers turnover and earnings management, this thesis approaches the objectivity and necessity of the existence of earnings management from the angles of limitations of Chinese accounting standard and defects of company administration, etc.. Furthermore, this thesis inquires into the motives of top managers'earnings management in listed companies from the perspectives of indenture duty of commission agency, of the scramble of power of attorney, and so on. This thesis makes it clear that the operational profit tends to be reduced the same year the president of the board of directors changes, while the operational profit tends to be increased the same year the manager turnover. It is also clear that, in that very year, the proportion of the reduced profit brought by abnormal turnover of the president(for instance, the resignation of the president) is much larger than that brought by normal turnover of the president(such as the normal election of a new president at the expiration of the previous term). Thus this thesis concludes that there exist serious earnings management operations the same year those companies change their top managers. Finally, in order to be used for reference on the aspects of supervising Chinese listed companies and straightening out earnings management, this thesis puts forward proposals on regulating and straightening out surplus management, including forming corporation governance structure considering the joint administration by profit related parts, strengthening the independence of the board of directors, devising a salary encouraging system centering on EVA, improving the manager's market and strengthening the external supervision, and so on.