Study On Several Problems About Earnings Management

Since 1990s, the phenomenon of earnings management in the capital market has become increasingly prominent, threatening both the reliability of fiscal information and the smooth operation of capital market. Therefore, earnings management has raised great attention of researchers home and abroad in recent years.This thesis divided earnings management into two categories: moderate earnings management and excessive earnings management, which were defined basing on the results they led to rather than the motives or initial purposes they applied to. Moderate earnings management played a positive role, which we were expected to support. However, excessive earnings management similar to those of cheatings on earnings manipulation and legal profit manipulation would exert negative impacts on our economy, which we must hold back. At the backdrop of China's circumstance, there were several causes resulting in earnings management: Management representations was the sponsor; Incomplete inner management structure was the base; Policy demands of securities business was the intention; Accounting standards was the instrument; Weak outer inspection system was the activator. The new accounting standards effectively restricted excessive earnings management, yet the ineffective execution of these new standards endowed excessive earnings management with new instruments, which could be solved through the professional judgments of accouters. At present, excessive earnings management exists commonly in the listed companies in China. There were differences in the elements influencing earning ratio of net capital between the samples with and without excessive earnings management. We've also seen difference on the changing extent of earning ratio of net capital between the samples with and without excessive earnings management. The wide spread of excessive earnings management requires us to come up with feasible measure immediately, which should include appropriate standards, complete assessment system, proper judgement, independent auditing and intensive punishments.