The Research On The Influence Of Listed Companies Financing Constraints On Earnings Management Behavior

Enterprises care about the availability of funds and what costs should be paid during the whole financing process, which is named as the financing cost. Broad existence of information asymmetry and agency problems, and being limited by the scale of the enterprise, commercial credit, transaction costs and other factors, there are significant differences in the cost of external financing and internal financing cost, which makes the enterprise universal existence of financing constraints. Financing constraints reflect the condition of enterprise’s financing and the daily operation. Information asymmetry not only causes the financing constraints, but also one of the causes of earnings management. Earnings management has been the subject of much attention in all walks of life, the research of the impact of earnings management behavior is a hot topic. But few articles clearly link financing constraints to the earnings management.This paper based on the shares in Shanghai and Shenzhen A listed companies from 2007 to2013 as the research sample, to test the impact of financing constraints on the behaviors of earnings management. The study found that: when the other conditions are the same, enterprise will manage the earnings management less when the enterprises have a high degree of financing constraints. Adding the factors of demand for funds, property rights as well as political association, the article found in the enterprises with big capital demand, non state-owned enterprises and private enterprises without political association, the financing constraints on the inhibition of earnings management is more obvious.This study indicates that financing constraints status does not suggest earnings management behaviors for sure, and stresses the importance of strict market supervision, improving the ability to recognize earnings management, and enhance the costs of earnings management. To achieve the goal, we should accelerate reforms of state-owned enterprises, cut down enterprises’ political connection, build a fairer market environment, enhance market efficiency, and stimulate market vitality.