The Relationship between Dividend Policy and Earnings Management in Mainland China

• Main Authors: Hsiu-hui Chen, 陳秀慧
• Other Authors: C. Edward Wang
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/41329256914656345129

碩士 === 國立中正大學 === 財務金融所 === 95 === The purpose of this research is to investigate whether dividend policy would be one of the motivations for earnings manipulation. Specifically, if the unmanipulated earnings fall short of the target earnings, whether it is possible that the management may manipulate earnings upward toward the target earnings to avoid stock price drop. Our study’s samples, from 1992 to 2005, consist of listed company in Shanghai and Shenzhen Stock Exchange (A Stock), and we divided the sample into two groups: manipulation group and control group. We use the regression model to investigate the dividend policy effect on discretionary accrual items. In addition, we use the t-test and KW-test to investigate whether there exists any differences between manipulation group and control group. The empirical results indicate that the predicted earnings management based on dividends is positively related to the discretionary accruals, which confirms dividend policy is one of the motivations for earnings manipulation. As manipulation tools are concerned, we find the management in different industries uses discretionary accrual items to manipulate earnings, especially the discretionary accounts receivable, discretionary inventory, discretionary accounts payable, non-operating income. Therefore, we conclude that the evidence of this study support the hypothesis that management may manipulate earnings upward to accomplish targeted earnings, and dividend policy would be one of the motivations for earnings manipulation.