journal6 ›› 2007, Vol. 28 ›› Issue (2): 124-128.

• Management • Previous Articles    

Relationship Between the Change of P/E Ratio and Earnings Management


  1. (1.Business College,Jishou University,Jishou 416000,Hunan China;2.College of Business Administration,Hunan University,Changsha 410082,China;3.Editorial Board of Journal,Jishou University,Jishou 416000,Hunan China)
  • Online:2007-03-25 Published:2012-06-18

Abstract: The meaning of earnings management is analysed,and its theoretical foundation is annotated from contracts theory and information economics.The meaning of P/E ratio is expatiated according to  Edwards-Bell-Ohlson (EBO) model,and  the relation of P/E ratio and the achievement of company is analysed.The relation of the change of P/E ratio and earnings management is analysed from the change of P/E ratio,the growth of company and the possibly false appraised value of company.Finally,some suggestions to keep away the earnings management are put forward.

Key words: earnings management, adverse selection, moral hazard, P/E ratio

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