Earnings management that is used to manipulate book earnings to an expected level has been one of the controversial topics in the accounting field. It occurs two ways: one is accrued earnings management and the other is real earnings management. Many studies show that these two methods have a reciprocal relationship based on the costs of using them. The accrued earnings management method is preferred when the accounting standards are flexible and the real earnings management is preferred when the legal systems are good. This paper verifies its findings by drawing a link to the new accounting standard announced by China on January 1st, 2007. It uses the Jones Model and Margin ROE in empirical analysis and selects Chinese listed manufacturing companies as samples.
Zhang, Y. (2012). The empirical study of earnings management based on Chinese listed companies. Lingnan Journal of Banking, Finance and Economics, 3. Retrieved from http://commons.ln.edu.hk/ljbfe/vol3/iss1/2