Research On The Relationship Between Supply Chain Concentration And Real Earnings Management

Since the supply side structural reform was launched in 2015,the annual capacity utilization rate of China’s manufacturing industry has been 79% lower than the international standard,and overcapacity is still widespread.As a kind of social capital,strategic resources and relationship network,supply chain relationship is crucial for manufacturing enterprises to enhance their competitive advantage,promote resource information sharing and build partnerships.The closer the supply chain relationship is,the more likely it will be accompanied by risks such as increased dependence on suppliers and customers,and weakened relative bargaining power,which will induce the management to take purposeful management measures to ensure the stability of cooperation,such as the real earnings management of the enterprise.The main research questions of this paper include whether supply chain concentration will stimulate the management’s real earnings management motivation and its function path;Whether financial flexibility can effectively adjust the relationship between them;Whether the relationship is still established under different property rights;Influenced by the supply chain relationship,whether the management has a preference for the direction and means of real earnings management manipulation.The empirical research on relevant data of listed manufacturing companies from 2011 to 2020 shows that:First,the improvement of the concentration of the whole supply chain or its single level will positively stimulate the increase of the real earnings management of enterprises,and this relationship can be more reflected in state-owned enterprises.Second,Financial flexibility can effectively mitigate the positive impact of the increase in the degree of real earnings management caused by the excessive concentration of the supply chain,and the adjustment benefit of debt flexibility is better than that of cash flexibility.Different financial flexibility dimensions have different effects.Debt flexibility can better mitigate the positive impact of supplier concentration on real earnings management,while cash flexibility can better mitigate the positive impact of customer concentration on real earnings management.Third,commercial credit financing plays a complete intermediary role between customer concentration and real earnings management,while it plays a partial intermediary role between supplier and supply chain concentration and real earnings management.Fourth,the improvement of supply chain concentration can promote the management’s real earnings management behavior to be more profitable in the direction of manipulation,and to use production manipulation and cost manipulation in the means of manipulation.In the supply chain relationship,enterprises should focus on improving debt flexibility to ease the pressure of supplier concentration on enterprise working capital,and enhance cash flexibility to reduce the impact of customer concentration on enterprise cash flow fluctuations.Before making investment decisions,investors should comprehensively consider the concentration of enterprise supply chain relations,the scale of enterprise commercial credit financing and the credibility of enterprise financial statement information.The external supervision department should strengthen the supervision of positive real earnings management of stateowned manufacturing industry,and focus on the possible manipulation of manufacturing enterprises in production and cost.