Research on Earnings Management for Bank Loan Financing of Chinese Listed Companies

This paper is based on Chinese listed companies' information during 1998 similar to 2005, to verify companies' earnings management to avoid loss for bank loan financing. In order to differentiate incentive of bank loan financing in companies' earnings management from other incentives, we divide all observations into two sub-samples: sample group A is the observations whose variable of bank loan financing is >0; while sample group B is the observations whose variable of bank loan financing is <= 0. We think as demand for bank loan financing, sample group A may be more intensive than sample group B to avoid loss in earnings management. Through verifying that statistical check variable of created Z-test, we find sample group A is really more intensive than sample group B in earnings management, and obtained evidence that sampling companies to avoid loss in earnings management for bank loan financing.