The Empirical Research Of The Relationship Between Firm's Financing Structure Variation And Earnings Management

Earnings management has always been a highlight of the study in accounting field, company's managers usually applied some accounting measure or via some transaction planning to verify report earnings, so as to convey illusive signal of good performance of the company. These activities can help managers to misguide outside investors to make investment decisions. As a core subject of accounting branch of learning, scholars'widely studies have indicated that regardless of the financing options, managers generally have the motivation to manage earnings in order to get the financing qualification or contract items.This paper use the finance data of the public companies who's on public during 2004-2010 as research sample, respectively discuss the relationship between earnings management and financing structure variation, debt variation, equity issue and retained profit.First of all, the paper measures the discretionary accruals with modified Jones model, and perceives it as the agent variable of earnings management; then regresses the variable with debt variation, equity issue and retained profit respectively; ultimately, the paper inspects the relationship between earnings management and financing structure variation with linear regression.The main conclusions of the paper are as follows:(1) The relationship between EM and debt variation are apparently positive.(2) The relationship between EM and equity issue are positive to an extent.(3) The relationship between EM and retained profit variation are positive to an extent(4) The relationship between EM and financing structure variation are positive, which means that under the comprehensive influence of the three factors above, the financing structure variation has a positive trend with EM.