The Impact Of Equity Pledge On Earnings Management

In the circumstances of capital market rapidly developing,equity pledge financing are more and more popular among stockholders for its high liquidity and price transparency.Although the real estate industry has a large investment scale and capital requirements with a long development cycle,financing through equity pledge tend to set real state industry free from finance pressure..Due to the asymmetry of information,it offers a chance for the opportunistic behavior of the major shareholder in manipulating accounting earnings to raise the stock price.after pledging equity,major stockholders are inclined to manipulate accounting earnings to avoid systemic risks caused by falling stock prices.In order to ensure the safety of funds,the pledgee has increased the supervision of the enterprise,and to avoid supervision,the major shareholders will take a more covert way for earnings management.Nevertheless the nature of property rights is an enterprise-specific property.There may be differences in the performance of different property rights in the behavior of equity pledges and the impact on earnings management.Based on this,my article mainly focus on the relationship between equity pledge,property rights and earnings management.In order to explore the impact of equity pledge of major shareholders in the real estate industry on earnings management,and based on this,we study the different degrees of impact of state-owned and non-state-owned equity pledges on earnings management.Firstly my thesis defines the related concepts of major shareholder equity pledge,earnings management,and the paper summarizes the related research results created by experts at home and abroad,and illustrate the main points of my research.Based on the A-share real estate industry listed companies from 2014 to 2018,this article construct a multiple regression model for empirical testing.The result shows that in real estate industry of china,the higher equity pledge rate major shareholders of state-owned and non-state-owned real estate companies reach,the higher degree of true earnings management one company wil reach;however,in the case of equity pledge,Compared with non-state-owned real estate companies,state-owned real estate companies are more inclined to take the real earnings management;and the nature of state-owned property rights of real estate companies will inhibit the impact of rising equity pledge rate on earnings management;In other words,it will reverse the relationship between the two fields.