Monetary Policy, Bank Monitoring, and Enterprise Earnings Management
ZHAO Chun-xiang1, YANG Yang1,2
1.School of Accounting, Zhongnan University of Economics and Law, Wuhan 430073, China; 2.School of Foreign Languages, South-Central University For Nationalities, Wuhan 430074, China;
Abstract Based on the data of A-share listed companies from 2006 to 2017, the paper examines the influence of monetary policies and bank monitoring on enterprise earnings management. The results show that enterprises’ aggressive earnings management decreases significantly when the central bank tightens the monetary policy. Similarly, enterprises are less likely to engage in aggressive earnings management when banks scrutinize closely on their loan process. This effect is further enhanced when combined with a tight monetary policy. Furthermore, bank monitoring can hardly restrict earnings management in enterprises with directors from banks whereas in the enterprises without such directors, bank monitoring significantly restricts earnings management. The study not only contributes to the literature on the economic consequence of macroeconomic policies and on influencing factors of enterprise earnings management, but also provides great value to decision making of managers of commercial banks and other enterprises. It also sheds some light on the optimization of corporate governance mechanism.
2019, Vol. 36 
