A Study On The Impact Of The Opening Of China's High-speed Rail On Corporate Earnings Management

Chinese capital market now is in an important period of development.At the background of regulators' penalties for corporate financial fraud is further strengthened,not only the government departments,but global investors increasingly attach great importance to the healthy development of capital market of China.Earning management behavior became the object of external regulators and investors to further investigation.Therefore,earnings management is not only a hot topic of academic research,but also an important indicator to measure the degree of information transparency,investor protection and capital market development.Since the opening of the Beijing-Tianjin intercity railway with a speed of 350 kilometers per hour on August 1st,2008,China has officially entered the era of high-speed railway.While the geographical space and time distance are rapidly shortened,high-speed railway also greatly reduces the cost of information flow between enterprises.Therefore,starting from providing convenience for information flow after the opening of high-speed railway,this paper investigates the influence of high-speed railway on the earnings management behavior of enterprises,analyzes the reasons,and discusses the development degree and prospect of China's capital market.Combining the methods of theoretical analysis and empirical research,this paper starts with the theoretical analysis of earnings management,including contract theory and asymmetric information theory.According to the analysis,the contract theory leads to the existence of earnings management,which is the inevitable outcome of the principal-agent model of modern enterprises and the concrete embodiment of information asymmetry theory.At the same time,earnings management will also negatively affect the contract of the enterprise.Because in the capital market,outside investors will also evaluate the investment prospect according to the enterprise's earnings status,and because of information asymmetry,it is difficult for outsiders to accurately obtain the real information of the enterprise,so the earnings information will also affect the contract in the enterprise's operation process.In addition,by analyzing the relevant theoretical analysis of high-speed railway on earnings management,it is believed that the opening of high-speed railway compresses the geographical space and time distance,but the theoretical basis of the opening of high-speed railway on earnings management is essentially the influence of analysts on the earnings management of enterprises.On the one hand,the supervision hypothesis believes that it can reduce the earnings management behavior of enterprises;on the other hand,the stress hypothesis supports the information of analysts puts pressure on enterprises to conduct earnings management.Based on the theoretical analysis,this paper constructs a time varying difference in difference model and analyzes the earnings management from the two dimensions of accrual earnings management and real earnings management.The data of A-share listed companies in Shanghai and Shenzhen from 2006 to 2018 and the data of highspeed railway since 2008 are used for empirical analysis.In the model,the key variable of high-speed railway and other control variables affecting earnings management are included.Through regression,it is found that under the background of China's capital market,the impact of high-speed railway on the earnings management behavior of enterprises supports the pressure hypothesis overall,that is,the high-speed railway would increase the earnings management behavior of enterprises.In order to further analyze the pressure hypothesis in the emerging capital market.The sample is divided into the central and western regions and eastern regions respectively,and conducted regression test.The results found that in the central and western regions where capital market develops relatively slow,enterprise significantly increase earnings management after high-speed railway opened.The analysis of the regression results further supports the pressure hypothesis.At the same time,earning management of companies in eastern region have been restrained,which support the monitor hypothesis.This shows that the capital market in the more developed eastern regions of China is relatively mature,and the market supervision and corporate governance system are also relatively perfect.The "supervision effect" after the opening of high-speed railway plays a role in these regions to a certain extent.In order to verify the robustness of the empirical results in this paper,the model is further tested.The parallel trend hypothesis test,placebo test and traditional difference in difference model were constructed respectively,but the results are all different from that of time varying difference in difference model.This shows the robustness of the model and proves that the empirical results are robust and reliable.Based on the results of theoretical analysis and empirical analysis,this paper concludes that the opening of high-speed railway has exerted a pressure effect on the earnings management of Chinese enterprises.There is still room for further supervision and control of earnings management,which needs to be further strengthened.The possible reason is that the role of supervision or pressure on enterprises due to the opening of high-speed rail depends on the degree of development of capital markets in the location of enterprises.However,the overall development of China's capital market is not perfect,and there are still the characteristics and defects of the emerging capital market.Only in the eastern region,where the capital market is relatively mature and the market regulation and corporate governance system are relatively completed,the "supervision effect" after the high-speed railway launched plays a role to a certain extent.In order to promote further development of capital market,this paper provides some suggestions,including building the good external governance environment,perfecting the legal system and improving the level of the rule of law at the national level,protection of the rights and interests of investors and properties to crack down on the bad earnings management such as destruction of the orderly development of capital market;At the same time,from the perspective of improving the internal governance of listed companies,this paper puts forward some policy suggestions,including improving the internal information disclosure system and strict implement.This paper also has some problems such as insufficient theoretical analysis and research depth.