China's Institutional Investors Holding Behavior Research On The Influence Of Earnings Management Of Listed Companies

The earnings management distorts the authenticity of the financial information, which provides wrong information for investors’ decision-making and disrupts the normal order of the capital market, so it has been a problem which cannot ignored to improve the quality of corporate disclosure and regulate the capital market. Institutional investors have made rapid development in the capital market in recent years, and have become an important force in the capital market. Due to its advantages of scales and professionalism, institutional investors can effectively oversee the behavior of the managers to reduce the problem of information asymmetry, and can balance the role of controlling shareholders. Through the exercise of shareholders’voting right, shareholders’proposals, lawsuits, private negotiations, conjunctions with other institutional investors, institutional investors can play a supervisory role, so people have high hopes over the supervision of institutional investors.However, it is found that, in previous empirical analysis, institutional investors have different attitudes towards supervision over the companies due to the differences in shareholding concentration, the holding period and supervision cost. Positive institutional investors would actively participate in the governance of the listed companies and act as the role of supervisory, which would play an inhibitory effect on earnings management. Negative institutional investors have no interest in the governance of listed companies, but would "vote with their feet", which not only does not inhibit the earnings management but also will exacerbate the listed companies to take the behavior of earnings management. Therefore, starting from the holding characteristic of institutional investors, this article focuses on the influences of different types of institutional investors’ holding behavior.This article first reviews the rise of shareholders’ activism of institutional investors and the relevant theory of earnings management, and combs and comments on the current studies on the relationship between the holding behavior of institutional investors and the earnings management of listed companies, then it brings out the point of heterogeneity of institutional investors and discusses the theoretical basis and the corresponding standard of heterogeneity of institutional investors. On the basis of theoretical analysis, this article extracts the holding behavior variables of institutional investors and verifies the influences of the differences in holding behavior of institutional investors on the earnings management of listed companies. It is confirmed that the positive holding behavior of institutional investors would inhibit the earnings management and passive holding behavior of institutional investors would exacerbate earning management.