An Empirical Study On The Relation Of The Board Characteristics And Earning Management

In recent years, with the increasing concern on earning management, people are paying more and more attention to the earning quality of listed companies. It’s proved that the governance structure of the listed company plays a key role in improving the reported information quality. As the critical mechanism of corporate governance, the board plays a vital role in corporate financial reporting process and quality. Under the socialist market economy, the ownership and control, as well as the governance structure between civil-owned listed companies and state-owned listed companies are significantly different, for which, the thesis continued the further research on the relationship between board characteristics and earnings management of the civil-owned listed companies based on the existing results, and then taking the state-owned listed companies as a reference, continued the comparative study of the supervision effect of the board to earnings management between these two kinds of companies.Based on the data of civil-owned listed companies in Shenzhen and Shanghai Stock Exchange from 2008 to 2010, firstly, the thesis selected the most appropriate measuring model of earning management through the sample test and calculated the discretionary accruals as alternative indicators of earning management. Then, taking the board characteristics as the independent variables, the thesis built a multiple regression model to test the relationship of the characteristics and earning management and found that the proportion of the independent directors and earnings management was in a U-shaped relationship, the number of board meetings, the proportion of directors holding company shares and earnings management was directly related, and the shareholding proportion of directors and earnings management was a negative ratio. Finally, by choosing the state-owned listed companies as paired samples, the thesis measured the discretionary accruals through the earning management measuring model, and did independent-samples t-test on the results. It turned out that the civil-owned listed companies and the state-owned companies showed significant differences in the board characteristic and earning management, as well as the supervision effect of the board.