Empirical Research On Refliction Of Real Earnings Management In Capital Market

Nowadays, shareholder value maximization is an important financial management objective. Capital markets business performance has always been the focus of enterprise’s attention. Meanwhile, the disclosure of accounting information is the most direct impact on the performance of the capital markets business reasons. Earnings management behavior as a means of corporate management earnings manipulation in some special purpose have a direct impact on the quality of accounting information disclosed to the public. Can real earnings management affect the market performance of listed companies? Whether investors will change the expectation of the company’s future earnings? This article will explore the capital market reaction of real earnings management.Based on the study of domestic and foreign scholars, this paper defines three types of real earnings management behavior, which is sales control, production control and cost control earnings management. Followed by is the define of short and long term response of the capital market. And then this paper analyzes the mechanism of real earnings management tools to respond in the capital market based on the efficient market hypothesis, signaling theory, resource dependence theory and stakeholder theory which lays the theoretical foundation for the empirical study below.In the empirical research, this paper chooses 2012--2014 listed companies in China as samples, use multivariate regression models and BHAR tests the relationship between the earnings management at different nodes and the cumulative rate of return of the listed company’s earnings under different management tools. The results show that, in shortterm market, the higher level of integrated real earnings management, production or cost control management, the lower abnormal return on the date of publication of financial statements. And long-term market gets the similar conclusion when the term is 12 months.Finally, based on empirical results, the article gives some proposal from investors, regulators and listed companies itself to improve the quality of accounting information, and improve the ability of investors, enhance the effectiveness of capital markets.