The Research On Accounting Conservatism Based On Real Earnings Management And Institutional Shareholdings Of Listed Companies

Accounting information distortion is very serious in the listed company both domestic and overseas. In the distortion of accounting information, part comes from accounting fraud,but the more distortion comes from earnings management. The existence of earnings management will badly affect the accounting information of listed companies, causing the information asymmetry. Misleading the external information users get wrong conclusions and make incorrect investment decisions. However, along with the strengthening of supervision and the change of accounting standards, the way of earnings management is also changing. Now compared with the traditional accrual-based earnings management, managers tend to adopt real earnings management. Because the real earnings management is more subtle and has better manipulation space. This makes the earnings management become more difficult to control. At the same time, some experts have put forward the strategy of "developing institutional investors", trying to use the resources and scale advantages of the institutional investors to play the role of external supervision and take part in the actual operation of the company to improve the accounting conservatism. But it is also uncertain that whether this policy goal will come true.This paper discusses the influence of real earnings management on accounting conservatism, and analyzes the supervision role of external institutional investors with the annual data of 2121 Shanghai and Shenzhen A shares listed companies from 1998 to2014.The results show that real earnings management will have a negative effect on the accounting conservatism. After distinguishing the different motivations of real earnings management, the empirical results still support the above conclusions. Listed companies increase profits through real earnings management will reduce accounting conservatism; and when they decrease profits, accounting conservatism will be improved. Regards to the supervision of institutional investors, this article suggests that, institutional investors failed to play a role of supervision, because of the current immature capital market. The research significance of this paper is that respectively from the internal mechanism and external supervision two aspects to study the accounting conservatism of listed companies. This allows us to have more fully understanding of the accounting information of capital market.