A Research Of The Effect Of The Characteristics Of Board Of Directors On Corporate’s Real Earnings Management

Real earnings management which is a means of adjusting earnings with real transaction is widespread in our country’s listed companies. Real earnings management will not only mislead external information users, but also give companies a huge economic cost, reducing the company’s long-term economic value. It is not conducive to the long-term development of China’s capital market. Studies have shown that effective external constraint mechanism will make an effect on the real earnings management.The internal corporate governance mechanism should also be concerned, and the board of directors is a good entry point.Based on the social capital theory,the government’s "helping hand" and’’grabbing hand" theory, "formal independence" and "substantial independence", and China’s A-share listed company samples, this paper attempts to find that whether the board characteristics of directors will make effect on the real earnings management.Paper finds that:(1) there is a significant negative correlation between the political relation and real earnings management level.(2) there is a significant positive correlation between the alumni relation and real earnings management extent.(3) there is a significant positive correlation between the location relation and reai earnings management extent. These mean that the reinforced social capital and the decreased independence will make the negative effect on the board governance and the quality of real earnings managementThis paper re-describes the board characteristics innovatively and introduces the real earnings management perspective and provides some advice on the board governance. It may also help the government, enterprises, and other stakeholders understand the board of directors and real earnings management better.