The Causes of Listed Companies’ Earnings Management and Its Governance

It is a universally acknowledged that profits from listed companied be managed properly. This paper analyzes the major causes of earnings management from listed companies based on agent-client relations, accounting characteristics and limitations, listed company systems and governmental behaviors etc.The paper also suggests possible policies for the governance of listed companies’ earnings management, i.e. the perfection of accounting standards, the improvement of internal supervision and motivation scheme, the strengthening of external supervision and management etc.