The Empirical Research On Effects Of Ownership Structure On Earning Management In China

In the past20years, the stock market and capital market has developed and expanded rapidly. However, the high-speed development has also brought problems due to the imperfect system and the earnings management is one of them. In recent years, some Chinese listed companies have been exposed of information disclosure scandals and earnings management has also become the focus of the accounting profession and regulatory authorities as well as the majority of investors. They have higher requirements for the open politics and effectiveness in the disclosure of earnings information. The quality of earnings information not only reflects the performance of fiduciary duty management to shareholders, but also is the initial information for medium and small investors while making investment decisions. High quality earnings information is able to report operating performance of enterprises and is also able to meet the demands of users. It is one of the prerequisites for information users to make the right decisions, but also one of the hallmarks of the effective development of the market. Immatureness of mechanisms of corporate governance is a huge reason which causes the enterprise management authorities manipulates earnings information. And one important component of the corporate governance mechanisms is ownership structure. With the deepening of the split share structure reform, China’s shareholding structure has undergone a big change, but there are still many problems. The phenomenon of’One share dominates exclusively’has been alleviated after reform, but it still occupies a certain part in China’s listed companies. Excessive concentration of shareholding in state-owned shares and its main missing bring the problem’internal control’. Therefore, the research is very necessary for the relations between stock shareholding institutions and earnings management. Due to the earlier development of the western capital market, the relevant aspects of the system are more mature and better. And researches in earnings management are more thorough and mature. Although China’s capital market has developed rapidly, it is still a late start. In recent years study based on earnings has gradually increased. Chinese scholars focused on the presence or absence of earnings management and its existence of duration earlier, and now they have started to study on the impact of factors on earnings management. This article is based on the literatures about earnings management from home and abroad and written from several aspects such as ownership concentration, ownership structure and equity attribute to discuss the impact of the shareholding structure of China’s listed companies on earnings management. In this paper, a method of combining normative analysis and empirical analysis would be used and the paper is divided into five chapters:The first part is introduction. It mainly introduces the research background and significance of this paper, and carries the entry point for this study, which is about the impact of shareholding structure on earnings management. After that, it points the possible innovations of this article and its structure and methodology. Chapter2is about literature review and basic theories. First of all, it reviews and summarizes literature on earnings management from home and aboard, and then analyzes the theoretical basis of earnings management and shareholding structure of listed companies.The third chapter comes up with the analysis of the ownership structure and current status of earnings management status of China’s listed companies. First it explore the characteristics and influencing factors of the shareholding structure of listed companies in China; then analyzes from the points of the earnings management’s main body, type and status quo; it also describes the relationship between the earnings management and shareholding structure of listed companies in China.The next chapter is the empirical test section. It first proposed the explanatory variables, explanatory variables and control variables then the reviews and selections of discretionary accruals profits econometric models from both home and abroad. After there is empirical research on the influence of the shareholding structure of China’s listed companies on earnings management by using descriptive statistical analysis and the corresponding regression model established between the explanatory variables and the explanatory variables and some other methods.The final part is conclusions and recommendations. It summarizes the above theoretical analysis and conclusions of the empirical analysis, and carries out recommendations to practical recommendations. Possible innovations of this paper lie as followsAs to the methodology, it combines normative research and empirical research. It takes the conclusion of normative study as a basis for the variable design, and then uses empirical research method to test the conclusions.The entry point of the study is the background of the split share structure reform in China. And it provides a detailed discussion of the key causes of the system in terms of China’s listed companies on their earnings management.The study of the relationship between institutional investors’ownership and earnings management in other paper is mostly based on all the institutional investors’stake. But since the majority of small institutional investors would act as’free-riders’, they have no power and ability to implement effective supervision of large shareholders. In view of this, it takes the sum of proportion of institutional investors holding as variable indicators of top ten shareholders to explore the relationship.Variable for earnings management alternative econometric model of the accrued profits maneuverability, on the basis of the land bridge construction model, increased project costs and line two independent variables, in order to calculate discretionary accruals profits.