Research On The Relationship Between Earnings Management And Readability Of Annual Reports Of Chinese Listed Companies

With the continuous development of the capital market,investors and other stakeholders are increasingly demanding the integrity,objectivity and timeliness of information disclosure such as corporate governance,internal control,business performance discussion and analysis.Financial statement information,which reflects the historical operating status of enterprises,is far from meeting the needs of the public and the growing market economy.Therefore,non-financial information plays an increasingly important role in the information disclosure system.As a useful supplement to financial information,non-financial information has received more and more attention.Especially with the gradual deepening of the research on corporate information disclosure by scholars from various countries,the readability of the annual report is becoming a hot topic.This paper takes China's listed companies as the research object,and examines the correlation between the earnings management behavior and the readability of the annual report through empirical analysis under the background of different property rights,providing direct empirical evidence for enterprises to design more reasonable operation and supervision mechanism and improve the readability of annual reports.Firstly,the paper defines the concept and measurement methods of annual report readability and earnings management,and combs relevant theories such as impression management theory,principal-agent theory and information asymmetry theory.And summarizes the influencing factors of the readability of annual reports of listed companies in China,theoretical analysis of the readability of the annals of the earnings management of listed companies in China.Then,Based on the panel data of 1,253 Chinese listed companies between 2007 and 2017,we empirically tests the relationship between the earnings management and the readability of the annual report,and further verifies the impact of property rights on this relationship.The results show that the earnings management level of listed companies in the current year is negatively correlated with the readability of the board report,that is,the companies with higher earnings management level are less readable,while the companies with lower earnings management level are more readable.The readability of the board report of the listed company in the current year is negatively correlated with the earnings management level in the next year,that is,the earnings management level of the company with poor readability in the current year is higher,while the earnings management level of the company with good readability in the current year is lower.Compared with non-state-owned enterprises,the management level of state-owned enterprises is more motivated to conduct earnings management on the readability of the board report,and the annual report of state-owned enterprises with poor readability is more motivated to conduct earnings management in the next year.The above results verify the hypothesis of this paper.Based on the above results,this paper puts forward some specific Suggestions,such as improving the performance evaluation system,strengthening the monitoring of the company's annual report,optimizing the writing standards of the annual report of listed companies,promoting the mixed-ownership reform,and strengthening the external supervision.