The Impact Of Capital Market Opening On Earnings Management Of Listed Companies

During the 14 th Five-Year Plan period,to promote high-level institutional opening-up is not only an important step for achieving high-quality and sustainable development of our economy,but also an internal requirement for promoting our capital market to strengthen two-way integration with international capital markets.As a system innovation with landmark significance in the process of China’s capital market liberalization,the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Connect mechanism plays an active role in optimizing the structure of investors,improving the pricing efficiency of the stock market and reducing the cost of capital of enterprises.However,compared with developed countries,the development history of Chinese capital market is short,and there are still some gaps in market efficiency,regulatory system,corporate governance level and so on.Therefore,it is of great theoretical and practical significance to explore the micro-governance effect of capital market opening under the background of accelerating the construction of "Dual Circulation" new development pattern,which contributes to exploring the road of capital market opening with Chinese characteristics and giving full play to the capital market’s function in serving the development of the micro real economy.This paper reviews the economic effects of capital market opening,corporate earnings management and other relevant research status.On the basis of summarizing investor cognition hypothesis,efficient market hypothesis and other theories,this paper proposes the hypothesis that capital market opening can help reduce the level of listed companies’ earnings management,and the mechanism of action is realized mainly through two channels.One is the dual internal and external governance of "voting with feet" and "voting with hands" by foreign investors,and the other is attracting analysts’ attention to improve the external information environment of enterprises.The implementation of Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect system is regarded as a "quasi-natural experiment" of capital market opening.This paper selects the data of A-share listed companies in Shanghai and Shenzhen from 2011 to2021 as samples and conducts an empirical study.The Difference in Difference model is applied to verify whether earnings management level of listed companies changes before and after the implementation of the policy.And through the analysis of governance channels and information channels,and the heterogeneity test based on the concentration of ownership,the intensity of audit supervision,whether QFII holds shares,and the external institutional environment,it further analyzes the influence mechanism of action and the effect of policies.As mentioned above,the research conclusions are listed as following:(1)Capital market opening events such as Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect will significantly inhibit the accrual earnings management and real earnings management of enterprises;(2)The governance effect of foreign investors’ shareholding and the information effect of the improvement of enterprises’ external information environment are the influence paths of capital market opening to reduce the earnings management level of enterprises;(3)For enterprises with higher ownership concentration,weaker audit supervision,non-QFII shareholding,and higher level of regional marketization and legalization,the governance effect of capital market opening is better.This paper expands the study of policy effect and influence path of capital market opening on earnings management of listed companies,and provides a new perspective of reducing earnings management.Based on the above research content and findings,the policy suggestions are as follows:(1)Continue to deepen high-level institutional opening to the outside world;(2)Enhance the efficiency of capital market resource allocation;(3)Guide enterprises to strengthen internal control and improve the quality of accounting information disclosure.