An Empirical Study On The Influence Of The Characteristics Of Board Of Directors On Earnings Management

Widespread earnings management leads that the authenticity and reliability of financial information is in question. This false information may be misleading information user’s judgment and decision making, and even influence the resource allocation function of the capital market. So How to restrict the earnings management of listing Corporation has attracted a lot of attention. To a great extent, defects of listing Corporation governance structure provided the "soil" for earnings management. While the board of directors is the core mechanism of corporate governance structure, whether it’s perfect or not will have a great influence on earnings management. Based on the review to the characteristics of board of directors and related theories of earnings management, this article selects the2012annual report of2470A shares in the listing Corporation which listed in Shanghai and Shenzhen Stock Exchange before2012for the study sample. Using cross-sectional modified Jones model as the basis, this paper establishes the econometric model of earnings management in accordance with China’s securities market, which is used for regression analysis on the relationship between board characteristics and earnings management.The study shows that Board size, proportion of independent director and finance director attendance are negatively related to earnings management; the proportion of directors who don’t receive remuneration is proportionate to earnings management; the situation that the working place of independent directors and the listing Corporation are the same can reduce the level of earnings management; chairman of board being general manager, the proportion of independent directors, whether establishment audit committees or not, the average salary contribute to the inhibition of earnings management, but not statistically significant; Business ownership, board meeting frequency is not significantly related to earnings management. Finally, according to the conclusion of the study, the paper puts forward the following suggestions:expand the scale of board of directors Appropriately; improve the independent director selection and evaluation mechanisms; increase the efficiency and quality of the meetings of the board of directors; carrying out stock option plan and increase the holding ratio of directors; strengthening the building of the Audit Committee; cultivate the external governance market.