Empirical Research On Preference In Choosing Methods Of Earnings Management Of Chinese Listed Companies

Earnings management of listed companies is a common phenomenon in global security market now days. It not only brings huge losses to investors but also harms the proper allocation of resources and the healthy development of stock market. The research on earnings management in overseas has been carried out for more than 20 years. Meanwhile in China, this field is still on the initial stage, especially the empirical study. To study companies' actions in earnings management is beneficial in two aspects: in practice, through the studies, investors will have rational and clear thoughts about companies' actions in this connection, so that they can figure out the meanings of businesses' revealed earnings information more deeply and make right decisions. The studies also would play a significant role in safeguarding investors' legitimate rights and interests, cleaning the investment environment of our stock markets and helping the markets operate soundly, regularly and orderly; in theory, it enriches the basic theories earnings management of domestic listed companies as well as provide powerful accordance and solutions for dozens of theoretical and practical problems such as improvement of management structure of the listed companies, controlling of organization behavior, appraisal and planning of salary management and supervision system of securities.Through ways of standardized and empirical research, the thesis researches and analyzes listed companies' methods of earnings management on the basis of predecessors' researches. First, it discusses related theories of earnings management, and through standardized research, conducts theoretical analysis to intentions of earnings management as well as to selection of methods of earnings management; second, using SPSS to execute empirical analysis of multiple linear regression to the methods of earnings management. The results indicate that Chinese listed companies indeed have preferred methods and from top to low in a descending order, the preference goes to earnings from subsidies, income on investment and non-business incomes and expenses; third, according to selection of methods, it classifies public companies and analyzes similarities of companies in each category and reasons for preferences. The conclusions are as such: the companies, which had bad results in assets or operations last year, or performed more awfully in major businesses this year than last, prefer the methods of earnings from subsidies and non-business incomes and expenses, and so do specially-treated companies; at last, it gives suggestion on countermeasures against the earnings management of listed companies.