Positivist analysis of earnings management of listed companies in real estate industry

Earnings management happens in most of Chinese listed companies. The listed companies in different industries adopt various methods to deal with earnings management according to their own accounting characteristics. But for the companies in the real estate industry, they could manipulate the earnings based on their special advance sale system and accounting principles. This thesis takes the listed companies issued non-standard unqualified report without reservation by the certified public accountant in real estate industry in the two cities of Shenzhen and Shanghai as the research sample, and the listed companies of the same number but issued standard unqualified report without reservation as the control sample in 2005. According to the special presale system, we introduced the deposit account into the modified Jones Model, and analysis it with regression model. With positivistic method, we analyze that the listed real estate companies manipulate earnings with the transfer of deposit account. We prove that the listed real estate companies that were submitted non-standard unqualified report by CPA use deposit account to manage earnings generally, and recommend some corresponding policies.