An Empirical Study On Earnings Management Of The Listed Companies In China

In the file of accounting theory research, earnings management is a major concern problem. Earnings management misleading the majority users of accounting information in decision-making through the legal form, and a large number of studies shows that there is general phenomenon of earnings management existing in China's listed companies. Earnings management is not just an accounting issue but a social problem. It will not only cause losses for investors but also affect our rational and effective allocation of capital, inducing Stakeholders'decision-making through Earnings management.Previous earnings management studies to the means and motivation of earnings management and the relationship between stock price's forecasting and earnings management, which research methods have been unable to identify the phenomenon of earnings management. This article takes a research of the existence of earning management on China's overall listed companies by using the surplus frequency distribution model. Surplus frequency distribution model is one way to measure earnings management, which verifies the frequency and amplitude of earning management by studying the frequency distribution characteristics of post-earnings earnings management, without the need to consider the impact of variables that cannot be measured. In this paper, study the existence of earnings management of whole listed companies in China by using the surplus frequency histogram and constructing inspection functions, in order to provide some decision support for the regulatory sector and the general public investors.The article is divided into three parts:theoretical analysis, empirical study and conclusions of research.Theoretical analysis section elaborates on the basic theory of earnings management and research methods of earnings management.In the empirical study section, selecting the 2006,2007 and 2008 earnings per share as a research target from China's listed company's annual financial report. Through the descriptive statistics of the means of earnings management of listed companies, obtained the conclusion that the number of income smoothing, big bath and policy induced does not have a significant in 2006,2007 and 2008 three years.Then positive research by using the frequency distribution model. Firstly using surplus frequency histogram and found that the overall surplus of China's listed companies is not high, then constructed the surplus frequency distribution function and test its significance at the threshold and found that the earnings management of China's listed companies is statistical significance in 2006,2007 and 2008.Finally, according to the results of this study, put forward suggestions and comments that the regulatory authorities of China should take independent financial audit to financial report of China's listed companies regularly.