Financial Crisis、the Nature Of Property Right And Earnings Management Behavior Of Listed Companies

The relation between the nature of property right and earnings management has been a hot topic around the world, and most literatures are based on normal context。 But while the economy gets worse, like financial crisis, the mechanism of the nature of property right on corporations’earning management could be changed. The financial crisis since2008has made a great shock on domestic listing companies both in the products market and the capital market. Based on that, this paper aims to extend related theories about earnings management behaviors in the crisis environment. To achieve the goal, we examine the changes of earnings management by comparing companies of different property rights.The main contents and conclusions are the following two aspects:Firstly, earnings management is confirmed to be wildly used through listing companies with motives like loss-avoidance、financing、maintain growth. Then changes of earnings management’s level of before and after financial crisis are examined. The results showed that in a crisis environment the intensity of accrual earnings management has been reduced while the real earnings management has been intensified. This conclusion confirmed Zang’s theory (2007) which is decision-making time of real earnings management is prior to that of accrual earnings management. Further study shows that there still exist preferences of how managers will choose those three kinds of real earnings management. Reducing the discretionary expenditures is a wildly used way both before and after the financial crisis. The overproduction way was less used before the crisis for its high cost and is significant intensified after the crisis.Secondly, previous studies showed that state-owned firms’real earnings management levels were significantly higher than those of non-state-owned firms’ Non-state-owned firms’accrual earnings management levels are significantly higher than those of state-owned property firms’. This paper studies the relationship between the nature of property rights and earnings management during financial crisis. The result shows there is no difference between state-owned property firms’ earnings management levels and those of non-state-owned property firms’after the outbreak of the financial crisis.This thesis improves the current study about the relationship between the nature of property rights and earnings management in two ways.On research content, we analyze product shock, financing shock and the mechanism of property rights in one framework. We also analyze the behavior of different nature of property rights enterprises at different stage of financial crisis, so we can compare the adjustment strategy for different firms.While on the research methods, most existing researches on the relation between the nature of property right and earnings management are focusing on accrual earnings management。This thesis considers the nature of property rights and the two earnings management relationship, including real earnings management.