Research On The Impact Of External Profit Pressure On Earnings Management Of Listed Companies

Analysts play an important role in China’s capital market.They can provide investors with future profitability expectations by interpreting public information and private information.This expectation largely represents the profit expectations of the capital market for companies.Therefore,whether or not this expectation can be achieved has brought profit pressure to corporate management.This article is based on the perspective of this external profit pressure and studies whether analysts’ earnings forecast will affect the earnings manipulation behavior of listed companies.The research conclusions of this paper can not only enrich the relevant research on the economic consequences of analysts’ behaviors,but also explore the motivations for companies to carry out earnings management from a new perspective.From the perspective of practical significance,this paper helps to curb earnings management activities of enterprises and is beneficial to them.The development of the securities industry and the specification of analyst behavior.The purpose of this paper is to investigate whether the external profit pressure brought by the analyst’s forecast will affect the earnings management of the company.Based on this,the quality of internal control will be added to examine its adjustment to the correlation between external profit pressure and earnings management.Finally,based on the characteristics of corporate property rights,audit quality and management power,the group analyses were conducted to further discuss the differences in the negative impact of external profit pressures among firms with different characteristics.This article selects Shanghai and Shenzhen A-share listed companies from 2009 to 2016 for 8 years(and deletes the financial industry,serious data missing,and ST sample data)as the research object.Empirical studies have found that: First,the external profit pressure will increase the possibility and motivation of companies to perform earnings management which proves that the management will conduct earnings management under the stimulation of external profit pressure;Second,the good internal control environment will slow down the stimulation of external earnings pressure to promote earnings management;Finally,in the further discussion of this article,it was found that the negative impact of external profit pressure was even more pronounced in non-state-owned enterprises and enterprises with lower quality audits and weaker management power.Based on the above research,this paper proposes policy suggestions such as establishing a team of highly qualified analysts,improving the professional assessment mechanism of analysts,improving analyst industry access standards and strengthening the regulatory role of the government and society in managing earnings of enterprises.The contribution of this paper is: First of all,from the perspective of profitability pressure,it enriches the research results of earnings management behavior.Selecting the analyst’s expected pressure is a novel and representative research entry point,which not only enriches the motivation,implementation approach and consequences of earnings management for the theoretical research,and,but also provide a good reference for strengthening the company’s supervision in practice and improving the realization of the effectiveness of the capital market.Second,from the perspective of internal governance,the role of internal control environment in the relationship between external profit pressure and corporate earnings management is discussed.The importance of internal control environment is analyzed,and the effective control of internal control over earnings management activities is determined.