Empirical Research On Bank Monitoring Effects Of Earnings Management Of China’s Listed Company

Since China’s capital market was established in the1990s,it’s possible for listed companies to financing directly. However, due to China’s capital market is not yet mature, financing through loans from financial institutions are still the most important financing channels of China’s listed companies, the pattern that indirect financing mainly through financial intermediaries direct financing supplemented form capital market has not been fundamentally changed. The reality, however, the prevalence of the phenomenon of earnings management of listed companies, the whitewashed financial statements are not conducive to the bank to make the right loan decision. The emerging in large numbers of evade repayment to bank loans has seriously reduced the bank’s asset quality. Then can bank monitoring effect listed company’s earnings management?In this article the sample are surplus and loan data from Shanghai and Shenzhen A-share listed companies in2004-2011.We make the empirical research on the bank monitoring effects of earning management of listed companies. The main content and viewpoints of the various parts are as follows:The first part is the introduction.In this part we conducte a brief introduction on the article’s research background, significance, research ideas and methods, as well as the main research contributions and shortcomings.The second part is the literature review. Due earnings management and banking monitoring at home and abroad are relatively independent, so this article were both reviewed.The third part is the theoretical analysis. The concept of earnings management, the basic characteristics of the root causes, dynamic due, metric method and bank supervision connotation depth theoretical analysis of the basis, the introduction of game theory’s ideology, the relationship between bank supervision and listed company surplus management’s conduct a formulaic analysis, the analysis found that bank earnings management of listed companies has the effect of supervision and supervision of banks and found that the greater the extent of earnings management of listed companies is lower, but can never be completely eliminated by the means of the bank supervision earnings management of listed companies behavior.The fourth part is empirical research. The part of the empirical studies of the effect of earnings management oversight for the bank to establish an empirical model using multiple regression method. First, according to the cross-section correction Jones model to estimate the extent of earnings management of listed companies, based on theoretical assumptions bank loans and financial indicators of listed companies as an explanatory variable to quantify and estimated regression coefficients of the positive and negative direction, and then on bank supervision and earnings management regression analysis and test parameters, to draw empirical research conclusions.The fifth part are policy recommendations and research prospects. This section summarizes the full text, and came out with the conclusion of the study, and gives policy recommendations based on research findings and the current situation in China, the prospect of future research directions in the field.The main contributions of this paper are the following:First:Expand the scope of the study of the study of earnings management. Earnings management of listed companies at home and abroad in the past the main entry point from the internal governance structure of the board of directors of listed companies, shareholders characteristics audit opinion. This article is from the external governance structure, the separation of bank debt from the company’s total debt, debt maturity, the size of the debt and debt to earnings management.Second:Enrich the content of bank supervision theory. The basic characteristics of the loan from the bank, such as the size of the loan, the loan period and the reputation of the lending bank and bank loans characteristics including the level of the lending banks, whether the lending bank loan contracts with the enterprise point of view, a comprehensive analysis of the bank the supervisory role of earnings management.Third:In this paper, on the basis of the conventional linear model, also joined the quadratic term, loan size, loan term, and the number of banks, and several other variables were optimized explore. Finally found the "inverted U" relationship between the term of the loan and corporate earnings management, loan size is no clear inverted U relationship.This article has the following shortcomings:First:The external environment is not taken into account. China’s securities market is an immature but in fast-growing emerging markets. Although this article’s data are fund from the capital markets, ignoring the systemic environment variable of the capital markets, may reduce the findings’convincing.Second:Industry factors didn’t been considered, this article is not specific subdivision and discussion on listed companies’ industry. In fact, the banks in the formulation of the loans policy or regulatory strategy, different industries have different requirements. This article didn’t included the considered areas, therefore, this is one of the future of research in one direction.