Research On Real Earnings Management Motivations And Its Economic Consequences

Corporate earnings information is the common interest concerned by all thestakeholders, such as the outside investors, managers, government, CREDITors.Improving the quality of earnings information is important to help the users of financialstatements to make reasonable investment decisions, and it is also helpful to achieve theefficient allocation of resources in capital markets. With the improving of accountingstandards and the strengthening of external supervision, the frequency of the traditionalaccrued earnings management is less and less. To achieve the profit target, managers tendto use more and more real earnings management (such as sales management、expensesmanagement and production manipulation).Although the presence of earnings management is objective, compared to accruedearnings management, which through using accounting policies and accounting estimatesto change the distribution of earnings in different periods, real earnings management ismore subtle and flexible. In theory, the Accounting Standards directly AFfect thefrequency and extent of accrual earnings management, which also indirectly AFfect thedepth of real earnings management. Whether the level of real earnings management per-and post-the new accounting standards that came into effect in2007changed, thisproblem is important for the standard setters and the market regulators.The motivation is the source of behavior, only analyze the reasons of real earningsmanagement in root, can we supervise the corporate real manipulation effectively. Usually,managers can increase the performance through real earnings management, they also candecrease the achievement, whether different motivations enterprises use different meansof real earnings management (including: sales manipulation, expenses manipulation,production manipulation) to realize the earnings targets, have different effects toenterprise performance, that is worth for us to study in-depth.Based on the above analysis, this paper presents three issues:①At present,whetherreal earnings management behavior existent in China ’s listed companies;②The levelchange of real earnings management between the per-and post-accounting standardsperiod.③Whether he level of real earnings management in enterprises that have themotivations of avoiding loss、SEOS、keeping earnings increasing、turning a loss、Smoothing are different to other enterprises, what are the consequence of real earningsmanagement? The empirical results show that, AFter the implementation of the new accountingstandards in2007, with the improving of accounting standards and the strengthening ofexternal supervision, the risk of corporate using accounting treatment (accounting fraudand accrued earnings management)to adjust earnings is GROWing, in order to get rid ofthe supervision of external auditors and the constraints of accounting regulatory, realearnings management is favored by more and more managers, namely, AFter theimplementation of new accounting standards,the extent of real earnings management isincreasing. Compared paired samples, the enterprises that have the motivations ofavoiding loss、SEOS、keeping earnings increasing、turning a loss、Smoothing, have lesscash flow、 abnormal discretional expenditures and abnormal high extraordinaryproduction, namely the motivated companies have radical real earnings management.Companies have avoiding loss、SEOS motivations exist abnormal high extraordinaryproduction, that will offset most of the positive impaction; while to companies, whichhave turning a loss motivation, whether they manipulate the sales、the expenses or theproduction, its behavior will make notable negative impaction to the companies economicconsequence; for smoothing motive enterprises, the increase of real earnings managementis positive to the companies economic consequence.