The Study On Earnings Management And Top Managers Turnover Of GEM Listed Companies

GEM listed corporation is the main force of innovative and high-growth enterprises inChina. Its successful launch will improve a multi level capital market system and expand thebreadth and depth. In recent years, the phenomenon of GEM listed corporation executivesresigned frequently, and the relationship between top managers turnover and earningsmanagement has been a hotspot of Chinese and foreign scholars. In order to study therelationship between top managers turnover and earnings management of GEM listedcorporation, this thesis intends to probe the following two issues: the first study to research therelationship between the top managers turnover and earnings management from the view oftransform reasons; the second to research the relationship between top managers turnover andearnings management from the view of limited shares.This thesis reviews the existing literature, combined the principal-agent theory,asymmetric information theory, contract theory and corporate governance theory with thetheoretical analysis on top managers turnover and earnings management. Then make relevantassumptions, induced the annual reports disclosure of reasons why listed GEM companies topmanagers turnover as well as statistical proportion of its restricted shares. The thesis selectssample data from2011to2013in GEM, using the extended revision Jones model through aindependent sample T test and multivariate linear regression analysis to make empiricalresearch. The thesis concludes conclusion as follow: firstly, abnormal changes in current year,top managers turnover occurred than the company has not changed is more inclined to actdownward earnings management behavior. Secondly, normal changes in current year,compared with the company that has not changed company does not act upward earningsmanagement behavior. Thirdly, for a restricted shares company, restricted shares accountingfor the proportion of total number of shares are positive correlation with the extent of earningsmanagement. When top managers turnover occur in these companies, they will tend to bemore desire to use earnings management behavior to improve company present financialsituation.Finally, this thesis suggest a few policy and recommendations, such as tighten the forceof supervision and management of top managers turnover on GEM listed company change process, enhance the internal control validity, establish a standardized employing mechanism,extend the circulation period of restricted shares, enact and improve relevant rules andregulations.