Research on the Impact of New Securities Law on Earnings Management of Listed Companies

Abstract

Based on a sample of A-share non-financial listed companies under the approval system from 2017 to 2020, this paper examines the impact of new Securities Law on corporate earnings management behavior. The study found that compared with companies without material internal control deficiencies, the earnings management level of companies with major internal control defects decreases more after the implementation of the New Securities Law. This phenomenon is more pronounced when the company has academic independent directors and analyst coverage is higher. Further analysis shows that the new Securities Law affects the earnings management by improving the quality of internal control and strengthening external supervision. This paper not only enriches the research on law and earnings management, but also provides evidence for the implementation effect of the new Securities Law.