The Analysis Of Choice Between The Accrual And Real Earnings Management

In recent years, real earnings management is attached great importance by scholars, which has been the main way to study how to implement the company’s earnings management with accrual earnings management. At the same time, the relationship between the two means has become an important issue among scholars. Overseas study found that in the process of earnings management, there is a trade-off between the two strategies.In this paper, we analyze the character of earnings management from three aspects: manipulation, concealment, and economics consequences of earnings management. On this basis, we analyze the trade-off between the two strategies from aspects: managerial ownership, institutional ownership and the control force of major shareholders, and then put forward the hypothesis.This paper consists of six parts: The first part is the introduction, this section is a summary of the background, which leads to research questions and reveals its value and significance. The second part is the literature review. The third part is theory alynasis; we analyze the earnings management, using the theory of convergence of interest hypothesis, Opportunism theory and so on. At the same time, we analyze the trade-off between the two strategies; using the theory of decision-making. The forth part is study design, this section puts forward hypnosis, defines the variables, the model. The fifth part is the empirical analysis. This part is to come to a conclusion, basing on the collected sample data, the corresponding assumptions, the models. The sixth part is the conclusion of this article.This paper mainly uses experimental methodology, legal analysis method documentary research and then concludes that:1.The managerial stockholding:(1)The managerial stockholding can inhibit both accrual management and real earnings management.(2)At the same time, managers will do more accrual earnings management behavior than real earnings management.2.Institutional investors holding:(1)Institutional investors holding would inhibit accruals and real earnings management, but it can’t lead to accrued earnings management preferences as we expect.(2) We divide the institutional investors into stable and non-stable institutional investors. Stable institutional investors can lead to the accrued earnings management preferences. However the non-stable institutional investors can not.3.The control of major shareholder:(1) The majority shareholder control will increase the accrual and real earnings management.(2) Under the large shareholders control, comparing with the accrual earning management, the real earnings management behavior will be used more frequently.