Earnings Management And Capital Market Reaction Relationship

Earnings management first began in the eighties of last century in Western academia,Accounting theory has been the focus of the study areas.Earnings management related theory accelerated GAAP’s perfection, and promote modern accounting theory and research methods development.With the capital markets in our continuous development and improvement, earnings management is not only caused by attention of academia practice circle and regulatory,but also having a certain influence in capital markets. Empirical studies have shown that the phenomenon of earnings management widespread in listed companies of our country. However, that earnings management of listed companies study on the effects of efficiency of resource allocation of academic research is still important and difficult.My article is based on the analysis of the earnings management of listed companies and capital market reaction relevant theories, combined with the sample data of1471A-share listed companies on the Stock market of Shanghai and Shenzhen in2007-2011, used multiple regression method, empirical analysis of listed company earnings management and capital market response relationship. Through the study,i found that①in the case of controlling for other factors,listed companies only consider a measure of earnings management, the accrual earnings management and real earnings management are positively correlated with turnover,abnormal cash flow and abnormal production costs are negatively correlated with cumulative average residuals, abnormal discretionary expenses is positively correlated with cumulative average residuals, accrued earnings management on the stock of abnormal return no significant effect;②in the case of controlling for other factors, when a listed company also consider two earnings Management when real earnings management on a positive correlation between turnover, accrued earnings management had no significant effect on turnover,accrued earnings management on stock in extraordinary positive correlation between the rate of return, abnormal cash flow costs is negatively correlated with cumulative average residuals,abnormal production and abnormal discretionary expenses are positively correlated with the cumulative average residuals.