Pressure Or Supervision:Institutional Investor Research And Earnings Management

Institutional investors are important external governance mechanisms of listed companies.There are two hypotheses about the governance function of institutional investors in the past literature:the supervisory hypothesis and the pressure hypothesis.Supervisory hypothesis holds that institutional investors have professional advantages and financial strength.By actively supervising listed companies and improving the governance level of listed companies,they can obtain investment returns related to corporate value.Pressure Hypothesis holds that short-sighted behavior of institutional investors still exists.By transferring the pressure of short-term profitable capital market to managers,the pressure signal of improving corporate performance of listed companies will affect the operating arrangements of listed companies,leading to prominent governance problems of listed companies.What are the new developments of these two hypotheses in bringing into the positive investigative behavior of institutional investors in corporate governance?Over the years,with the reform of the system and the implementation of the relevant rules of investor relationship activities,the data module of investor relationship activities of listed companies has been continuously improved,which promotes the change of relevant research from adopting shareholding indicators in a "one-size-fits-all" manner to observing the positive investigative behavior of institutional investors.Therefore,starting with investor research activities,we actively explore the earnings management of institutional investors in listed companies.The influence of rationality level has theoretical and practical significance.Based on the survey data of Shenzhen Stock Exchange listed companies from 2012 to 2017,this paper explores the impact of institutional investors' survey behavior on earnings management level of listed companies.Overall,there is a significant negative correlation between institutional investors' research intensity and earnings management level.With the increase of the research intensity of institutional investors,the scope of information dissemination of listed companies expands.The more managerial opportunism is monitored,the lower the level of earnings management.On the subject level,the stronger the research intensity of the major institutional shareholders,the lower the level of real earnings management,compared with institutional investors who are not the top ten shareholders.Institutional shareholders who are the top ten shareholders have higher voice rights than non-top ten ones,and play a supervisory role in the real earnings management behavior of enterprises,while accrued earnings management behavior is more tolerant for them.On the object level,when the institutional investors' research intensity of the high-level receptionist is slightly enhanced,the level of earnings management shows a positive change,but not significant,compared with the non-senior(chairman or general manager).When high-level managers participate in institutional investors' research,investors are more willing to build relations with management,while ignoring opportunistic behavior of manager,leading to the unable supervision function of research activities.On the content level,the level of real earnings management decreases significantly with the increase of the intensity of long-term-oriented research activities,and decreases significantly with the increase of the intensity of short-term-oriented research activities,while the level of accrued earnings management decreases to a certain extent,but not significantly.Based on the development stage of institutional investors and the realistic background of the change of corporate governance environment,this paper strives to improve the research of institutional investors' governance mechanism.On the basis of exploring the investigative behavior of institutional investors,this paper excavates the characteristics of the subject,object and content of investigative activities,analyses the key channel factors for institutional investors to participate in investigative activities,and puts forward pertinent suggestions for giving full play to the role of external mechanism of institutional investors at the present stage,so as to further improve the investor relationship activities and the relevant rules of information disclosure and make active exploration.