Chairmen’s Early-life Economic Environment And Enterprises Earnings Management

Earnings management reduces the quality of corporate financial information,misleads stakeholders to make wrong decisions,and is not conducive to the stability and effectiveness of the capital market.Previous studies have suggested that under the principal-agent system,managers play important roles in earnings management activities for the purpose of maximizing their own interests.And nowadays,more and more studies have begun to focus on the impact of the personal characteristics of executives on the earnings management of enterprises.In the current situation of preventing and defusing financial risks,strengthening information disclosure and risk supervision of listed companies,it is necessary to expand the research on the influence of executives’ characteristics on earnings management.On the basis of summarizing previous studies,especially the Upper Echelon Theory,the Imprinting Theory and the Personality Theory,we select the Shanghai and Shenzhen A-share listed companies from 2010 to 2017 as research samples,and collect chairmen birthplace information manually to analyze how the early-life economic environment of chairmen impact earnings management of enterprises.Furthermore,we discuss the relationship between early-life economic environment of chairmen and earnings management of enterprises in groups according to the nature of property rights and the quality of corporate governance.Our results are as follows.First,due to the differences in characteristic,risk preference and capacity,the better the economic environment in which the chairmen grow up,the easier it is for them to carry out upward earnings management in the company they are in charge of.Second,due to the significant difference in the internal governance environment of state-owned enterprises,the influence of the early-life economic environment of chairmen on the earnings management of state-owned enterprises is weakened.In addition,it is found that the improvement of corporate governance level can inhibit the impact of the chairman’s early-life economic environment on earnings management.Based on the research conclusions,we put forward relevant policy suggestions.It is suggested that the corporate governance structure should be improved to restrain the earnings management tendency of chairmen and avoid too radical financial decision-making behavior.At the same time,stakeholders and analysts should be good at using the "soft information" of chairmen traits to analyze the decision-making style of the company’s management so as to better predict and analyze the company’s performance and financial information.The findings of this paper expand the research perspective of executive traits and corporate governance,and enrich the research of executive echelon theory and earnings management influencing factors.The conclusion has important theoretical and practical significance for deepening the understanding of information disclosure quality of listed companies and stabilizing the capital market order.