Stock market volatility and earnings management- An empirical study on China regional data

This paper empirically studies the influence of stock market volatility and regional effect on earnings management of 1024 listed firms from 2007 to 2008. It is found that stock market volatility has a very significant positive effect on earnings management; even stock market volatility has a reversing-U curve relationship with earnings management. And the regional difference has a very significant positive effect on earnings management, especially in China´s eastern area. Also earnings management would be influenced by time factor and in different year, the level of earnings management is different, which also illustrate different external environmental factors in different period. In addition, we find that board factor does not play a significant role on earnings management, while executive compensation always influence on earnings management significantly.