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Web of Proceedings - Francis Academic Press

Study on Earnings Management and Accounting Standards of Listed Companies

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DOI: 10.25236/erems.2018.029


Ling Cheng, Zaoe Qi

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Ling Cheng


Earnings management is the behavior of the enterprise management authority to take into account the accounting data, especially the accounting surplus, by various means within the scope permitted by the accounting standards in order to realize its own interests or maximize the value of the enterprise. In the past, research on earnings management has focused more on the concepts, motivations, and methods of earnings management. At the time when China's new accounting standards have just been promulgated, combined with the new trends of domestic and foreign research, this paper turns its attention to one of the constraints of earnings management—accounting standards. On the basis of constructing the basic theoretical framework of earnings management, the relationship between earnings management and accounting standards is studied. On the one hand, accounting standards have effectively constrained the occurrence of corporate earnings management behavior by formulating accounting treatment rules for corporate economic operations. However, due to various reasons, accounting standards can not completely eliminate earnings management, and may even lead to excessive earnings management behavior; on the other hand, the market accounting information crisis induced by earnings management behavior in turn provides a basis for the formulation of accounting standards, in order to promote the further improvement of accounting standards; however, due to the existence of the economic consequences of accounting standards, relevant interest groups, the pursuit of their own interests, and through political means (generally expressed as lobbying activities) put pressure on the accounting standards formulation process, making accounting the criteria cannot be completely neutral, but the balance of interest is offset towards the strong group. The paper also confirms the interaction between earnings management and accounting standards through empirical analysis and case analysis. On this basis, this paper makes an evaluation and suggestion of China's new accounting standards based on earnings management, which helps to improve China's accounting standards, and then constrains the earnings management behavior of listed companies.


Accounting Standards, Listed Companies, Earnings Management