An Empirical Study On The Relationship Between Earnings Management And Corporate Governance In China 's Listed Companies

In the securities market, accounting information is in dominant status among all information which listed companies have announced. But in recent years, the securities market at home and abroad arose serious of problems of accounting information distortion. Most of these were caused by earnings management.A lot of extensive literatures show that: corporate governance is an important factor to influence earnings management. Because if asymmetric information between stakeholders, earning management leads to conflict of interest,but corporate governance is an effective mechanism to coordinate all stakeholders.So the effectiveness of corporate governance must influence the behavior of earnings management.When researching the relationship between earnings management and corporate governance, researchers in the past ignored dynamics nature of corporate development and thought all the firms are undifferentiated in different phases. But in accordance to enterprise life cycle theory which presented by Edith, the enterprise can face different questions because of the different phases so we regard enterprise life cycle theory as regulated variables when we research variables of corporate governance which can influence the behavior of earnings management to put forward pertinent plans meanwhile, we can put forward theoretical foundation for relevant supervision department.So to same extent this research can correct the behavior of accountant and control the behavior of earnings management to guarantee the development of our securities market, this paper includes seven parts:The first part, we put forward the background and meanings about this paper, and at last we add to innovation points to explain the necessity of research.The second part,we discuss status of development of listed companies.The third and fourth part, we expound the relationship between earnings management and corporate governance at the basic of theories. Firstly from the points of earnings management, we expound the definition, method and motivation of earnings management. Secondly, we expound the relative theories of corporate governance. Including the definition and review, we find that the research result exist big difference between the relationship of earnings management and corporate governance. Because the research time is earlier, so research in abroad country often applied to time series method, on the contrary, the development of our securities market is later than the development of abroad.So we can only use section data to research. From the research object,our scholar often aim at special enterprises, so the suggestion which scholar put forward applies to all common listed company.The fifth part is the part of the design of study. This paper’s data comes from all listed companies’ of shanghai and Shenzhen stock exchange in 2014.secondly,according to the feature and actual operability, we use modified Jones model to measure earnings management. At last, we choose board of directors, board of supervisions and management lager as variables of corporate governance because of structural features of corporate governance.In the sixth part, we introduce the part of empirical study.Firstly, we depart growth stage and mature period according to investing cash flows and financing cash flows during three years.Secondly, we use Jones model to measure earnings management.At last, we build regression model between variables of corporate governance and variables of earnings management.Finally, we find that in different period, the significant correlation of earnings management and corporate governance is different.The last part is suggestions which we put forward according to the result if empirical study. Standardize corporate governance’s mechanism, improve the supervision mechanism of the securities market and strengthen the supervision of the earnings management behavior.There are some innovation points in this paper:1. This paper researches the relationship of corporate governance and earnings management at the basis of previous studies and focus on the dynamic condition of development of companies. Because of the introduction of enterprise life cycle theory, we can put forward pertinent suggestions to standardize corporate governance mechanism. 2.This paper choose board of directors, board of supervisors and management layer as variables of corporate governance at the basis of looking up literatures all these variables put at different period enterprise life cycle theory, we can analyze comprehensively the relationship of corporate governance and earnings management.