Controlling Shareholder Expropriation, Performance Dilemma and Earnings Management

The paper collects manually the data of controlling shareholder expropriation of listed companies in Chinese capital markets to empirically study the behavior mode from controlling shareholder expropriation(or tunneling) to widow dressing by earnings management of financial statements when facing performance dilemma.The results show that for listed companies dropping in performance dilemma,they are more likely to manage earnings upward to obtain better performance when controlling shareholder expropriation is more serious.Listed companies with controlling shareholder expropriation try to delay the bad news and inflate profits by earnings management in order to escape the blame of investors and supervisors.