| To curb the opportunistic earnings management of the listed companies, improve the information public system and to convey the true abundant and relative information, many scholars have investigated the influence of corporate governance on earnings management. While the role of company boards in earnings management has been examined in developed markets setting, particularly the; US and UK, understanding their effectiveness in emerging markets like China is particularly important due to differences that exist in the structure of business organizations across these markets.This dissertation reviews the historical documents of board characteristics home and aboard. Based on the theoretical analysis about the two aspects, using a sample of cross sectional data of listed Chinese firms covered the financial year 2005,I analyze the relationship between board characteristics and earnings management. Specifically, I use below-the line accruals to measure earnings management, meanwhile consider four such characteristics, namely the presence of CEO duality, size of board directors, diligence of board and percent of independent directors. The results show that diligent boards are associated with higher earnings manipulation, while board size can restrain earning manipulation to some extent. With respect to the other two control variables;-results indicate that CEO-duality and percent of independent directors on the board do not significantly influent earnings management.This dissertation analyzes the present situation of boards of companies in China, based on which the author discusses the problems existed in boards of companies in China from production, decision machism and dependence of board. In the end, the author put forwards the measurements to optimize board of directors in China. The measurements include the perfect compositon, consummating the decision machism of board, consummating construction of board by megers and aqcusitions. |
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