Political Connection?Executive Power And Earning Management

With the deepening of reform and opening up,the role of the government is becoming more and more important in the process of economic and social development.Therefore,it is an urgent need for the current economic development to further promote the separation of government and enterprises and construct a clean and efficient service.Since the 16 th CPC National Congress,the anti-corruption work has gradually been integrated into the construction of the characteristic socialism.After the 18 th CPC National Congress,the strengthening of the anti-corruption efforts has also aroused the public's thinking on the prevention and punishment of corruption.Many scholars believe that the deep-seated defects in the current economic system lead to corruption,and the occurrence of power-seeking behavior belongs to one of the deep-seated defects in this system.Power-seeking behavior specifically refers to that enterprises utilize some non-productive activities to occupy scarce resources and obtain the increase in wealth,and the most common phenomenon in China is the use of government power to get extraordinary benefits.This behavior is mainly through the establishment of links with the government in order to obtain the appropriate government protection and preferential treatment,and to promote their own development,so the enterprise's behavior that we call "corruption" is very easy to happen.And this corruption reflected in the enterprise is the earnings management behavior that we usually concerned about.From the enterprise level,in the current ownership structure system,the "one dominance" phenomenon is still more common in the enterprise.Although most companies now have the separation of ownership and management,but the majority of the company's management is composed of large shareholders,which will lead to the growing power of management which will provide the conditions for the abuse of power,and also provide the conditions for managers to use the power to manage earnings.Enterprises have a variety of motivations for earnings management,including pay,taxes,political costs,etc..For the purposes of this article,this paper argues that the political power generated by the power-based rent-seeking behavior and the management power generated under the ownership structure of "one share" is also the motive of the enterprise's earnings management.Therefore,this paper determined the content of this article and research methods based on the relevant research at home and abroad,combined with the current social hot spot.On the basis of the theories of principal-agent theory,management power theory and power rent-seeking theory,this paper studies the relationship between political association and earnings management,executive power and earnings management.Based on the study of the relationship between the two sides,this paper further analyzes the relationship between political connection,executive power and earnings management,and focusing on the the regulatory role of political relationship between the executive power and earnings management of the relationship between.In this paper,the data of private listed companies listed in Shanghai and Shenzhen in 2013 and 2015 are taken as the research samples,and the relationship between the three is studied by the combination of normative research and empirical research.And on the basis of theoretical analysis,the corresponding research hypothesis is put forward,and different methods are adopted to measure the three variables: Using dummy variables to measure political context variables,assign a review of annual reports from all private listed companies on your resume chairman and general manager;For the measurement of executive power variables,the assignment method is used to assign the indicators of the variables of executive power,and then the principal variables are used to synthesize the comprehensive variables of executive power;For the measure of earnings management,the extended Jones model is used to calculate the accrual profitability of the firm as a measure of earnings management variables,and on this basis,establishing regression model for the relationship between the three empirical research,and then come to the conclusion,putting forward appropriate policy recommendations.The empirical results of this paper show that earnings management is positively related to political relations,that is,compared with non-political private enterprises,with political affiliated enterprises,the earnings management will be more motivated,and in the political association of enterprises,the strength of political relations will also affect the degree of earnings management;Earnings management and executive rights are positively related,that is,in the context of the separation of the two powers,the higher the authority is,the higher degree of private enterprise earnings management will be;Political relations for the relationship between executive power and earnings management has a positive regulatory role in the political association of enterprises,The relationship established between the firm and the government will,to a certain extent,strengthen the impact of corporate executive power on earnings management.At last,this paper will put forward the relevant policy recommendations for these conclusions.