Board Characteristics And Earnings Management Research

They are concerned about the accuracy of information on the financial statements that enterprise managers and investors, potential investors, business creditors, auditors, securities investment companies, etc. In recent years, frequent false financial data of listed companies puzzled investors and other relevant stakeholders. Financial fraud has become a worldwide concern. Reference to "false accounting information", "financial fraud", we will think of earnings management. In order to improve the quality of accounting information, countries are working to effectively control the company's earnings management.The significance of this study is to control earnings management that can improve the quality of accounting information. And also it has great significance of building accounting theory. We learn the board system from the Western countries, We can not draw conclusions that the theory is suitable for our conditions. We can identify deficiencies from its system via our study. we can give some useful advice to strengthen the board system,protect of investors and contribute to the healthy development of the securities market.General framework of this paper as follows:Firstly the article describes the research background, define the characteristics of earnings management and Board of Directors and make a clear analysis of the object and scope. With the principal-agent theory, asymmetric information theory and contract theory, we analyze the relationship between characteristics of the board of directors and curbing of earnings management. Secondly I used empirical study to analyze and test the relationship between earnings management and the board of directors' characteristics. And finally I provide recommendations for improving the board of directors system from the perspective of board of directors'corporate governance.This paper is based on principal-agent theory, asymmetric information theory and contract theory. (1)The emergence of principal-agent system bring about earning management. the Board functioning effectively can balance internal and external forces and protection of the parties,reduce the agency costs and reducing the companies'earning management.(2) the information that enterprise's management owns are more comprehensive,adequate and timely contrast to other concerns. This will Provides a convenient and possible opportunities to earnings management for the management. Board of directors should fulfill their supervisory and control functions, monitoring and suppression of the earnings management, so as to improve the quality of accounting information and information utilization.(3) because the contract is incomplete, it gives managers the opportunity to choose the accounting policy. Some contracts of the business such as management compensation contracts which need to use accounting information to determine how to implement, that makes all stakeholders have the motivation for earnings management. If the independent directors and the company are in the same city, then they will have more experience and time to oversee the company, so this article support the view that the directors and the company in the same city can curb earnings management.this article is divided into five parts, the first is the introduction, it describes the background, purpose and significance, research ideas and methods, the main research and innovation. The second part is the literature review about the Board characteristics and the relationship between board characteristics and the earnings management literature review. The third part is the Definition and theoretical basis, The fourth part is the empirical part of this article, first proposed the hypothesis, define the relevant variables, the article describes the research design, then the article, empirical test results. The fifth part is Conclusions and policy recomm endations.Based on above theory, we study the impact of board features to control earnings management. In contrast, independent directors are not vulnerable to the impact of controlling shareholders, the independence of its decision-making are better. So I think that the proportion of independent directors is negative with the degree of earnings management. So I oppose the following two hypotheses: Hypothesis 1, the proportion of independent directors is negative with the degree of earnings management, Hypothesis 2:Independent directors and company address in the same city have a negative correlation with earnings management; The larger the board, they play a greater Supervision, the right to play each other checks and balances, So I oppose the following hypothesis, Hypothesis 3:Board size negatively relate to earnings management. The Board need to oversee the company's senior management, if chairman and general Manager are the same person, we doubt whether the board can play oversight responsibilities they due to. So I oppose the following hypothesis, Hypothesis 4:chairman and general Manager are the same person is Positive correlation with earnings management. The higher the frequency of the board is, the higher the enthusiasm of the directors is. Then they will pay more attention to protect the interests of shareholders. So I oppose the following hypothesis, Hypothesis 5, the number of board meetings negatively correlated with earnings management. If the directors of the company owes more shareholding, the Directors will have great enthusiasm and passion to pay more attention to business management, So I oppose the following hypothesis, Hypothesis 6:The proportion of shares held by the Board have negative relationship with earnings management.Removing flaw data as well as companies in finance class,The data of Shenzhen and shanghai stock market A Shares in 2009, totally 1262 Sample points, is selected in the research. EXCEL and the SPSS 13.0 software are mainly used in the data processing. Through research, I draw the following conclusions:(1) the higher the proportion of independent directors are, lower companies'degree of earnings management is. whether Independent directors and the company address are in the same city,that had no impact on earnings management.(2) there is no significant relationship between board size and earnings management.(3)If chairman and general manager are the same person, the degree of earnings management is higher. (4) There was no significant relationship between the number of board meeting and earnings management, because the board of directors of our country is only a mere formality, (5) the board of directors have the higher percentage of shares, earnings management is lower.This paper put forward proposals from two aspects, one aspect is to improve the board system, another aspect is to improve the external mechanism of the board. We should improve the independent director system and improve the proportion of independent directors of the company. We should avoid chairman and general manager are the same person as far as possible,improve the independence of the board,properly limit the size of the Board of Directors,Improve the quality and effectiveness of board meetings。We should improve the quality of accounting standards Continuously and improve the company's information disclosure system. Also, we should improve the effectiveness of the capital market and strengthen the credibility of the mechanisms.The main innovation of this paper is that the background is based on the split share structure reform is basically completed and the new accounting system has already begun the implementation of the listed companies, because of some domestic research have confirmed that the split share structure reform,and new accounting standards influence corporate governance, this choice of data is selected from listed companies that have completed the split share structure reform and implement the new accounting standards. Another point is that the article will address whether the independent directors and the company is in the same city as the explanatory variable, although it did not prove there are significant relationship between them, this shows that listed companies can look for independent directors in a broader range.Because I have limited capacity and limited time for prepare my paper, there are many shortcomings in this article, I hope that some people will do future studies to improve shortage.