| From the 1980 s,earnings management has become the forefront of financial theory and accounting theory at home and abroad,and has also turn into a spotlight in the field of investment practice.Listed companies implement earnings management based on different motives of enterprises,such as adapting to the needs of corporate operation management,sending favorable news to the external market,smoothing corporate profits,adjusting corporate expenses and pursuing managers’ personal interests.Commercial banks occupy a key position in China’s capital market due to their unique characteristics in operation,service,supervision and management,capital composition and other aspects,especially their main operation mode of credit service.In reality,commercial banks often take earnings management for various reasons such as bank development or management factors,which affect the investment decisions of bank stakeholders and the market performance of banks.Earnings management has an impact on the authenticity and effectiveness of bank financial information,and some surveys show that compared with others firms,commercial banks are more motivated to implement earnings management.The management who can control the company’s resources has higher prestige and discourse power than ordinary employees,which provides great convenience for them to carry out earnings management.The more capable a person is,the more familiar he or she is with the operation process of the company and the policies and regulations of the country,and the more complicated and secret the means of mastering surplus are.In the case of poor operation of the company,competent managers can predict the impending operation crisis of the company more quickly and accurately,and control the company’s surplus by adjusting profits.Excellent managers want to improve the efficiency of the company,so as to win the praise of the company and the whole society.They can master the trend of the bank and know the market prospect of the industry,and are familiar with the policy orientation of the government.They also have more confidence in their earnings management behavior without being discovered.Therefore,the management ability of commercial banks has a positive impact on earnings management degree.Based on Demerjian’s(2012)method,this paper uses the more accurate data envelopment analysis(DEA)method to separate the benefits created from the enterprise level and the benefits brought by the managers themselves from the total efficiency of the bank,and the benefits created by the managers are the measured value of the management ability.In addition,given that the main business body of China’s commercial banks is currency and loan losses are used as profit control tools,the measurement method of their earnings is also different from that of companies in ordinary industries.Therefore,this paper first verifies the current situation of adjusting earnings with the provision of loan loss provisions in China’s banking industry.Then,referring to Kanagaretamental(2010),the two-stage separation analysis model is adopted to separate the manipulative and non-manipulative provisions of loan loss provisions.The manipulative part is the degree of earnings management referred to in this paper.Considering that 2007 was the first year when China’s new accounting standards were fully implemented and the global financial crisis started in 2007,economic fluctuations were more obvious under the influence of financial crisis,and lots of commercial banks were more willing to strengthen the control of earnings in the face of greater performance pressure.Therefore,this paper finally selects 38 Chinese listed commercial banks from 2007 to 2020 as the research object,with the support of high-level management theory and agency theory,combined with the "economic man" hypothesis,to study the impact of management ability on the earnings management degree of commercial banks.Result display:(1)there is a significant positive relationship between loan loss reserve(LLP)and earnings level(EBTP).In order to control the surplus,commercial banks often adjust the loss reserve,increase or reduce the strength of loss provision,and then affect the business performance.(2)There is a positive correlation between management ability and earnings management degree of commercial banks.The more competent a manager is,the greater degree of earnings management be.Based on various motives,the management of the bank adjusts the bank’s current surplus by manipulating the bad debt provision of loans within the scope permitted by the policy and transmits good bank information to the outside world.The more capable a bank is,the more it manipulates its surplus.(3)The quality of internal control can adjust the impact of management ability on earnings management of commercial banks.The tighter the internal controls is,the less impact of management ability on earnings management of commercial banks.Based on these,this thesis raises constructive suggestions for commercial banks from both the economic environment and internal management. |
