The Effect Of Ownership Structure On Earnings Management Of Chinese Listed Companies

Accounting information, especially earnings information, is playing an extremely important role in the corporate governance. With the constant development and gradually complication of the economy, the investors’interest and the capital market are all influenced by earnings management. Earnings management has already been the key point of the academic research and the focus of people from all circles of life. Ownership structure, as the basis of internal corporate governance, is an important influencing of earnings management. Ownership structure includes ownership concentration and ownership nature.Most of the empirical researches about the effect of ownership structure on earnings management from scholars both at home and abroad has expanded the discussion about ownership concentration, ownership counterbalance, the proportion of the circulate stocks and the proportion of organizational investors’ stocks. But there are much fewer documents about the relationship of ownership nature and earnings management. To make up for this deficiency, in my thesis, all listed companies are classified as state-controlled companies and not-state-controlled companies to find out the difference in the effect of ownership structure on earnings management in these two types of listed companies. The objectivity is to enrich the empirical researches on the effect of ownership structures on earnings management from a new viewpoint to help the listed companies to set up a reasonable structure of stock right.My thesis combined the normative researches and the empirical researches to test and confirm roundly. In theory section, my thesis mainly expounds the basic theory on earnings management and ownership structure. The basic theory on earnings management includes the implication, both active and passive influence, the classification, and the distinction between financial fraud and earnings management. Then there are the reasons for earnings management, including the Principal-agent Theory, the Contract Theory and the Asymmetric Information Theory from the theoretical angle, the flexibility of accounting standard for business enterprises and the unsound supervision systems from the institutional agent, and the contract motivation, the governmental motivation, the shifting responsibility motivation and the capital market motivation from the subjective motivations of the listed companies. The basic theory of ownership structures mainly includes the implication, the characteristics, and the characteristics of earnings management under the two different types of ownership structure.Based on the theory researches, my thesis speaks on the effect of ownership structure on earnings management from four sides, ownership nature, ownership concentration, ownership counterbalance, and the proportion of organizational investors’ stocks, and then makes research hypothesizes. The empirical section makes all of the A-share listed companies in Shanghai and Shenzhen Stock Exchanges as the research objects, and chooses the related data from2008to2010and finally gets4668samples, of which the state-controlled samples is2844while the not-state-controlled samples is1824. In the descriptive study, firstly my thesis studies the whole listed companies samples, and then carries out T Test for the discrepancy of the mean while carries out Non-parametric Test for the discrepancy of the median of the state-controlled and not-state-controlled samples, and finally it turns out that the earnings management degree is clearly lower in the state-controlled samples than the not-state-controlled samples. The Empirical Tests include two steps; one is to calculate the earnings management level, the other is tc carry out regression analysis about the effect of ownership structure on earnings management. After comparing several earnings management calculating methods my thesis chooses the separating accrued profit method, to calculate the non-dirigibility accrued profit, and treat the absolute value of NDAC as earnings management level. Then my thesis analyses the relationship between earnings management and ownership nature, ownership concentration, ownership counterbalance and the proportion of organizational investors’ stocks.The research results turn out that:firstly, the earnings management level is much lower in the state-controlled listed companies than in the not-state-controlled listed companies; secondly, the ownership concentration is positively related to the earnings management level, while the effect is much lower in the state-controlled listed companies than in the not-state-controlled listed companies; thirdly, the other big shareholders hasn’t check and balance the first big shareholder; finally, the proportion of organizational investors’ stocks is negatively related to the earnings management level, while the counterbalance effect is much lower in the state-controlled listed companies than in the not-state-controlled listed companies...